BJ's Wholesale stock up as traffic trends and new clubs drive upside, says Goldman

On Thursday, Goldman Sachs maintained a Buy rating on BJ's Wholesale (NYSE: BJ) stock and increased its price target to $102 from $93. The firm's analyst highlighted the company's impressive third-quarter performance and updated full-year 2024 guidance, which was accompanied by the news of a membership fee hike.

The analyst noted BJ's Wholesale stock's significant rise, approximately 9%, compared to a modest 0.7% gain in the S&P 500 on the same day, attributing the surge to the positive earnings report and the anticipated impact of the membership fee increase.

The analyst from Goldman Sachs expressed continued confidence in BJ's Wholesale's earnings potential, driven by a robust top-line outlook. This optimism is supported by sustained strong traffic trends, volume growth in grocery categories, and increased customer engagement, especially in general merchandise categories following the company's assortment refresh.

The analyst reinforced the view that the club model remains highly attractive in the retail sector, offering a compelling value proposition to consumers who are still navigating inflationary pressures.

The report also acknowledged BJ's Wholesale's potential for new club growth, which is expected to help the company further expand its market share going forward.

Despite some investors perceiving the day's 9% stock jump as excessive, with the feedback suggesting the move was partly propelled by the membership fee increase announcement, Goldman Sachs reiterated its Buy rating. The firm's estimates for BJ's Wholesale are projected to increase by an average of around 5%.

In other recent news, BJ's Wholesale Club (NYSE:BJ) demonstrated a strong performance in the third quarter of 2024, with net sales increasing by 3.4%, reaching nearly $5 billion.

The company also reported a surge in membership by 40% since fiscal 2018, totaling 7.5 million members, and membership fee income rose by 8.4%, amounting to approximately $115 million.

Analysts from both Jefferies and DA Davidson maintained a Buy rating on BJ's Wholesale and increased the price target to $110.00, reflecting confidence in the company's growth trajectory.

These analysts attribute BJ's Wholesale's success to an uptick in customer visits and strategic initiatives, including a membership fee increase, the first in seven years.

The fee hike is seen as a balance between offering value to customers and investing in the expansion of its warehouse count, with plans to expand to over 250 clubs by year-end. Digitally enabled sales also saw a 30% year-over-year increase, indicating the effectiveness of the company's digital transformation efforts.

Looking ahead, BJ's Wholesale projects Q4 comparable sales excluding gas to grow between 2.5% and 3%, and full-year adjusted EPS to be between $3.90 and $4.00. These recent developments underscore BJ's Wholesale Club's strong position in the competitive big box retail market and its ongoing success.

InvestingPro Insights

To complement Goldman Sachs' bullish outlook on BJ's Wholesale (NYSE: BJ), InvestingPro data reveals some interesting metrics that align with the analyst's positive stance. The company's revenue growth of 5.18% over the last twelve months and a quarterly growth of 4.87% in Q2 2025 support the analyst's view of a robust top-line outlook. Additionally, BJ's EBITDA growth of 5.28% in the same period further reinforces the company's strong financial performance.

InvestingPro Tips highlight that BJ's is trading near its 52-week high, which is consistent with the stock's recent 9% surge following the positive earnings report and membership fee increase announcement. The company's profitability is also emphasized, with InvestingPro noting that BJ's has been profitable over the last twelve months and analysts predict continued profitability this year.

It's worth noting that while Goldman Sachs has increased its price target to $102, the current InvestingPro Fair Value stands at $76.73, suggesting potential for a more conservative valuation. Investors considering BJ's stock might find value in exploring the additional 11 InvestingPro Tips available, which could provide a more comprehensive view of the company's financial health and market position.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.