Ollie's Bargain Outlet Holdings, Inc. (NASDAQ:OLLI) shares are trading higher on Wednesday.

Yesterday, the company reported third-quarter adjusted earnings per share of 58 cents, beating the street view of 57 cents. Quarterly sales of $517.43 million (+7.8%) beat the analyst consensus of $517.36 million. The increase in net sales was the result of new store unit growth. Comparable store sales, however, decreased by 0.5%, a decline from the prior year's increase of 7.0%.

RBC Capital Markets analyst Steven Shemesh reiterated the Outperform rating on the stock, raising the price forecast to $130 from $120.

The analyst notes that the impact of the liquidation was less severe than expected, and the guidance for the fourth quarter indicates strong underlying sales trends.

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Per Shemesh, a 10% unit growth in 2025 is more achievable. This reduces some of the risks and suggests potential market share gains in 2025. Approximately 205 Big Lots, Inc. (OTC:BIGGQ) stores, located near Ollie's Bargain locations are set to close, most likely by the end of the fourth quarter.

Overall, the analyst projects continued progress, resulting in strong earnings growth and modest multiple expansion.

As a result, the analyst revises the fourth-quarter sales growth estimate to +3.0% (previously +2.0%) and adjusts earnings per share to $1.22 (from $1.17).

For 2025 and 2026, the analyst maintains sales growth projections at +3.5% and +2.0%, with adjusted EPS estimates of $3.92 and $4.35, respectively (up from $3.84 and $4.28).

Truist Securities analyst Scot Ciccarelli reiterated the Buy rating on the stock, raising the price forecast to $121 from $109.

The analyst highlights that the company's third-quarter results were strong despite challenges such as a flyer shift, competitor closures, and hurricanes.

The company also reaffirmed its full-year guidance. Gross margins improved, rising back above 40%, which should ease concerns from the previous quarter, the analyst adds.

While competitor store closures may continue to be a short-term challenge in the fourth quarter, these closures could present long-term opportunities for increased sales and market share.

Additionally, Ollie's is actively acquiring locations from bankruptcies, Ciccarelli adds.

Overall, unit growth remains robust, operational performance is solid, and the company's value-focused offering is gaining traction with consumers facing inflation, the analyst notes.

The analyst writes that Ollie's is benefiting from its strong value proposition, as cost-conscious consumers prioritize getting the best deal.

Price Action: OLLI shares are trading higher by 3.09% to $114.46 at last check Wednesday.

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