'Confidence is building': Wells Fargo upgrades mid-cap discount retailer Ollie's

Wells Fargo has upgraded mid-cap discount retailer Ollie’s Bargain Outlet as the company expands its store network and increases comparable-store sales, while it may also benefit from new tax incentives in the U.S. As a result, the analysts say “confidence is building into an attractive '26 set-up.”

On Friday, Wells Fargo analyst Edward Kelly upgraded Ollie’s shares to “overweight” from “equal weight,” CNBC reported.

The investment bank also raised its target price for the stock by more than 8% to $130 per share. That is nearly 19% higher than the stock’s closing price on Friday. On that day, the shares rose 4.2% to $109.30 per share.

Ollie’s shares “have been a debated, volatile stock historically, and entry point usually proves critical,” Kelly wrote. The stock is currently trading roughly a quarter off its 52-week high, at about 24 times Wells Fargo’s forecast earnings per share for fiscal 2026 and 21 times its estimate for 2027. “The risk/reward looks appealing to us given the earnings tailwind from store growth,” the analyst added.

Kelly revised his recommendation on Ollie’s shares a day after the company reported results for its fiscal fourth quarter, ended January 31, where net sales rose 16.8% year over year to $779.3 million. The discount chain attributed the increase to a 15.4% rise in the number of stores and a 3.6% increase in comparable-store sales.

“OLLI’ story continues to build momentum; we haven’t always been on board, but confidence is building into an attractive ’26 set-up,” Kelly wrote. He fingered new store openings a key driver of the discount chain’s business. In fiscal 2025, Ollie’s opened a record 86 stores, and it plans to launch 75 new locations in the current fiscal year, according to its press release. As a result, the company expects annual revenue of $2.99-3.01 billion, roughly 13% higher than in 2025.

Ollie’s could also become a beneficiary of Trump’s so-called “Big Beautiful Bill” tax law. “We are particularly positive on the 1H set-up for OLLI, as the company looks well positioned to capture BBB stimulus,” Kelly wrote. The company “has an older customer, so it’s leveraged to the higher tax deduction for seniors and the Social Security Cost-of-Living Adjustment,” he added.

Over the last 12 months, Ollie’s shares have gained nearly 8%.

Wall Street is generally sanguine on the stock's outlook: analysts have issued 14 “buy” recommendations versus three “hold” ratings. The average target price stands at $138.90 per share, implying 27% upside from the closing price on Friday.