BJ’s Wholesale stock rating reiterated at Buy by Goldman Sachs

Goldman Sachs maintained its Buy rating on BJ’s Wholesale (NYSE:BJ) with a price target of $130.00 on Thursday, representing a potential 20% upside from the current price of $108.72. The firm cited expectations for earnings upside driven by strong traffic trends and unit volume growth in grocery categories. According to InvestingPro data, BJ’s has demonstrated strong profitability with a return on equity of 33% and revenue of $20.7 billion in the last twelve months.

The research firm highlighted increased customer engagement in general merchandise categories resulting from BJ’s assortment refresh efforts. Goldman Sachs also noted that BJ’s is benefiting from greater consumer interest in its product offerings, reflected in its solid 2.84% revenue growth and 18.57% gross profit margin over the last twelve months.

The club model was identified as "one of the most compelling in retail" due to its strong value proposition at a time when consumers continue to face inflationary pressures. Goldman Sachs indicated this business model is particularly advantageous in the current tariff environment. InvestingPro analysis supports this view, assigning BJ’s a "GOOD" overall Financial Health score, with particularly strong marks in profitability metrics.

BJ’s expansion plans feature prominently in the firm’s positive outlook, with the retailer planning to open 25-30 new clubs over the next two fiscal years. This growth trajectory is expected to support continued market share gains for the wholesale club operator.

The company’s long-term growth runway remains a key factor in Goldman Sachs’ investment thesis, with the firm expressing confidence in BJ’s ability to capitalize on its business model advantages while expanding its physical footprint.

In other recent news, BJ’s Wholesale Club reported its first-quarter fiscal year 2025 earnings, surpassing expectations with adjusted earnings per share (EPS) of $1.14, against a forecast of $0.91. However, the company reported revenues of $5.03 billion, falling short of the anticipated $5.19 billion. Despite the revenue miss, BJ’s demonstrated strong growth in digital sales, which increased by 35% year-over-year, and opened five new clubs during the quarter. Membership fee income also rose by 8.1% to $120.4 million, reflecting robust customer loyalty.

DA Davidson recently raised its price target for BJ’s Wholesale to $140 from $130, maintaining a Buy rating. The firm’s positive outlook is supported by BJ’s strong first-quarter performance and strategic initiatives, such as the Fresh 2.0 program, which has been successfully expanded to include meat and seafood. BJ’s continues to see growth in higher-tier memberships, aligning with its value proposition and customer appeal. The company is also focusing on expanding its regional presence and market share within the warehouse club sector.

These developments highlight BJ’s ongoing efforts to enhance its product offerings and membership benefits, which are seen as key drivers for future growth. DA Davidson’s confidence in BJ’s growth trajectory is reflected in the adjusted price target, indicating a positive outlook for the company.

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