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On Wednesday, BMO Capital Markets adjusted its outlook on Ross Stores, Inc. (NASDAQ:ROST), a $44.9 billion specialty retailer, by reducing the price target from $168.00 to $156.00. Despite this change, the firm maintained an Outperform rating on the company’s stock. According to InvestingPro data, the stock is currently trading near its 52-week low, with analyst targets ranging from $124 to $188. The decision followed Ross Stores’ latest earnings report, which revealed a bottom-line beat primarily due to a significant reduction in selling, general, and administrative expenses (SG&A). This was partly attributed to the sale of a packaway facility, which provided a 1.05% boost to the company’s EBIT margin.
Ross Stores’ management provided forward guidance for the first quarter and the full fiscal year that fell short of expectations. They indicated a slowdown in sales trends from January into February and projected comparable store sales (comps) to increase by up to 2% at the high end, compared to Wall Street’s anticipation of a 3% rise. Furthermore, the projected earnings per share (EPS) for both the upcoming quarter and the full year were also guided lower than analysts’ estimates.
BMO Capital’s analyst commented on the guidance, suggesting that despite the apparent uncertainties, Ross Stores’ forecasts might prove to be conservative based on historical trends. The firm’s revised price target of $156.00 is based on approximately 22 times the estimated EPS for the fiscal year 2026.
The earnings report and subsequent guidance have set the stage for investors to watch Ross Stores’ performance closely in the coming quarters. The company’s ability to navigate the retail environment and deliver on its conservative guidance will be key to meeting the expectations reflected in BMO Capital’s Outperform rating. With revenue growth of 8.54% and a P/E ratio of 21.5x, investors seeking deeper insights can access comprehensive analysis and 12 additional ProTips through InvestingPro’s detailed research reports.
In other recent news, Ross Stores Inc . reported its fourth-quarter 2024 financial results, highlighting an earnings per share (EPS) of $1.79, which exceeded analyst expectations of $1.65. However, the company’s revenue slightly missed projections, coming in at $5.91 billion compared to the anticipated $5.94 billion. For the full year, Ross Stores achieved a 3.4% increase in sales, reaching $21.1 billion, and net income grew by 10.5% to $2.1 billion. Despite these positive earnings, Citi analyst Paul Lejuez adjusted the price target for Ross Stores from $152 to $146, maintaining a Neutral rating, due to a slowdown in sales trends and conservative guidance from the company. Ross Stores has projected its first-quarter EPS to be between $1.33 and $1.47, below the consensus estimate of $1.53, with comparable sales expected to be flat to a decrease of 3%. For fiscal 2025, the company plans to open approximately 90 new stores, indicating continued expansion efforts. Ross Stores’ management remains cautious, attributing some challenges to external factors like weather and macroeconomic volatility, but expressed confidence in the off-price retail model’s resilience.
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