BJ’s Wholesale stock gets tactical positive rating from Evercore ahead of earnings

Investing.com - Evercore ISI has maintained an In Line rating and $117.00 price target on BJ’s Wholesale (NYSE:BJ) while initiating a positive tactical position ahead of the company’s second-quarter earnings release scheduled for Friday, August 22. According to InvestingPro data, BJ’s current stock price of $103.24 sits well below analysts’ high target of $140, while the company maintains a "GOOD" overall Financial Health score of 2.58/5.

The research firm anticipates a high single-digit return potential following the earnings call, despite widespread expectations for a second-quarter comparable sales miss and earnings guidance softening. With revenue growth of 2.84% in the last twelve months and a projected 6% growth for the fiscal year, Evercore believes comparable sales will strengthen better in the second half than current Street expectations, partly aided by inflation and tariffs. InvestingPro analysis reveals 8 additional key insights about BJ’s financial position and growth prospects.

According to Evercore’s analysis of Bloomberg Second Measure data, BJ’s sales are likely to come roughly in line with Street estimates, with demand improving in July after a soft patch in June. The firm notes that June was not as hot as last year and somewhat rainy, while the company faced challenging comparisons from last year’s heat-driven sales of air conditioning units.

Evercore’s recent survey work indicates consumers are more likely to renew their BJ’s memberships than they were last year, even with the fee increase. This suggests improving traction from the merchant team on general merchandise initiatives and positive impact from enhanced focus on perishable self-distribution.

The research firm believes BJ’s will likely reiterate its full-year guidance, potentially benefiting from inflation as tariffs reach store shelves, with price increases of 5-15 percentage points for discretionary and general merchandise categories, and potentially 50 basis points or more on the grocery side.

In other recent news, BJ’s Wholesale Club Holdings Inc reported its first-quarter fiscal year 2025 earnings, with adjusted earnings per share of $1.14, surpassing the forecast of $0.91. However, the company reported revenue of $5.03 billion, falling short of the expected $5.19 billion. Analysts have shown optimism ahead of the company’s second-quarter earnings report, with TD Cowen raising its earnings per share estimate to $1.12, slightly above the Street consensus. TD Cowen, UBS, and Goldman Sachs have all reiterated their Buy ratings, with respective price targets of $140.00, $135.00, and $130.00. DA Davidson also increased its price target to $140, citing the company’s strong first-quarter performance and strategic initiatives. Goldman Sachs highlighted BJ’s Wholesale’s increased customer engagement and strong traffic trends. Meanwhile, UBS noted the continued demand for BJ’s membership offering, despite potential challenges in comparable sales growth. These developments indicate a continued positive sentiment among analysts regarding BJ’s Wholesale’s performance.

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