Citi cuts Ross Stores stock price target to $146 from $152

On Wednesday, Citi analyst Paul Lejuez adjusted the price target for Ross Stores, Inc. (NASDAQ: ROST), reducing it to $146.00 from the previous $152.00, while maintaining a Neutral rating on the stock. The $44.86 billion market cap retailer, currently trading at $135.97, maintains a GOOD financial health score according to InvestingPro analysis. The revision followed the company’s fourth-quarter earnings report, which met consensus expectations, excluding a one-time benefit of $0.14 per share. The report showed slightly better comparable store sales (comps) but a slightly weaker gross margin (GM).

Lejuez noted that while Ross Stores’ performance was in line with market expectations, there was a noticeable slowdown in trends towards the end of January and into February. The stock, which generally trades with low volatility and is currently near its 52-week low, has seen revenue growth of 8.54% over the last twelve months. Consequently, management has provided guidance for first-quarter comparable sales to be flat to a decrease of 3%, contrasting with the consensus projection of a 2.6% increase. Additionally, the earnings per share (EPS) for the first quarter are forecasted to be between $1.33 and $1.47, below the consensus estimate of $1.53.

For the full year, Ross Stores’ management set guidance for EPS at $5.95 to $6.55, which is also below the consensus of $6.67. Lejuez pointed out that while some of the factors affecting this outlook may be temporary, such as weather conditions, management has chosen a conservative approach to guidance. This is notably the first time new CEO Jim Conroy has presented such guidance.

Despite the conservative outlook and recent slowdown in sales trends, Lejuez expressed a belief that the off-price business model remains well-positioned amid the current economic uncertainty. With a healthy current ratio of 1.57 and trading at a P/E ratio of 21.52, the company shows solid fundamentals. He suggested that the disruptions caused by tariffs and economic factors could actually be beneficial for the off-price retail sector. The analyst concluded with an assessment that the risk/reward profile for Ross Stores is balanced, indicating a neutral stance on the stock’s potential performance. For deeper insights into Ross Stores’ valuation and 12 additional exclusive ProTips, visit InvestingPro, where you’ll find comprehensive analysis and the detailed Pro Research Report.

In other recent news, Ross Stores Inc (NASDAQ:ROST). reported its financial results for the fourth quarter of 2024, with earnings per share (EPS) of $1.79, surpassing the forecasted $1.65. However, revenue slightly missed expectations, reaching $5.91 billion against the anticipated $5.94 billion. For the full year, Ross Stores achieved sales of $21.1 billion, marking a 3.4% increase year-over-year, and net income rose by 10.5% to $2.1 billion. The company plans to open approximately 90 new stores in fiscal 2025, indicating ongoing expansion efforts. Despite the positive EPS results, Ross Stores’ stock experienced a decline in regular trading hours. Analysts from firms such as JPMorgan and Citigroup (NYSE:C) have shown interest in the company’s strategic priorities and potential impacts of tariffs on merchandise costs. CEO Jim Conroy emphasized the company’s adaptable business model and focus on enhancing marketing and store environments. Ross Stores also announced a 10% increase in its quarterly cash dividend, reflecting its commitment to returning excess cash to shareholders.

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