Ross Stores stock price target cut to $161 by TD Cowen

On Monday, TD Cowen analysts adjusted their outlook on Ross Stores, Inc. (NASDAQ: NASDAQ:ROST), reducing the price target to $161 from $165 while maintaining a Buy rating on the company’s stock. The revision follows Ross Stores’ recent performance update and comes amid a challenging week for the stock, which has declined over 10%. With a market capitalization of $45.14 billion and a P/E ratio of 24.04, the company maintains strong fundamentals, achieving a perfect Piotroski Score of 9 according to InvestingPro data. The revision follows Ross Stores’ recent performance update, indicating a positive trend in second-quarter comparable store sales, with expectations at the high end reaching a 3% increase. Management anticipates the second-quarter EBIT margin to remain consistent with the previous year’s figures.

The analysts noted that Ross Stores is facing merchandise margin pressures in the second quarter, with an estimated impact of 90 to 120 basis points due to tariff pressures, as approximately 50% of its inventory is sourced from China. Despite these challenges, the company maintains robust financial health with a gross profit margin of 32.71% and strong liquidity, evidenced by a current ratio of 1.55. The lack of annual guidance from the company has introduced additional challenges for financial modeling in the second half of the year. Consequently, TD Cowen has made slight adjustments to their earnings estimates for Ross Stores, factoring in the merchandise margin pressures.

Despite these challenges, the analysts believe Ross Stores has opportunities to improve its sourcing and that the company’s value proposition continues to resonate with customers. The current market conditions suggest that Ross Stores is positioned to capitalize on the value gaps in the retail sector, which could potentially drive future growth and performance.

Ross Stores operates as an off-price retailer in the United States, offering a variety of brand name apparel and home fashion products at discount prices. The company’s ability to navigate tariff pressures and maintain a competitive edge through value offerings is crucial for its continued success in the competitive retail landscape.

Investors and market watchers will be keeping a close eye on Ross Stores’ performance in the coming quarters, as the company strives to balance margin pressures with strategic sourcing and value-driven sales initiatives. The revised price target from TD Cowen reflects the current market conditions and the firm’s confidence in Ross Stores’ business strategy. For deeper insights into Ross Stores’ financial health, valuation metrics, and comprehensive analysis, investors can access the detailed Pro Research Report available on InvestingPro, which covers over 1,400 US stocks with expert analysis and actionable intelligence.

In other recent news, Ross Stores, Inc. reported its first-quarter 2025 earnings, showing a slight beat on both earnings per share (EPS) and revenue forecasts. The company achieved an EPS of $1.47, surpassing the forecast of $1.43, and revenue reached $5 billion, exceeding the $4.94 billion forecast. Despite these positive results, Ross Stores withdrew its annual guidance due to macroeconomic uncertainties, including the impact of tariffs. Jefferies analyst Corey Tarlowe responded to these developments by lowering the price target for Ross Stores to $135 from $145, while maintaining a Hold rating, citing challenges related to the company’s reliance on Chinese imports.

Bernstein analysts also weighed in, maintaining a Market Perform rating with a $147 price target, highlighting the significant headwind to gross margins anticipated in the second quarter due to tariffs. They expressed skepticism about Ross Stores’ strategy to implement price increases later in the year, given the current demand environment. The company’s heavy reliance on imports from China remains a concern, as it accounts for over 50% of its inventory, which could pressure merchandise margins moving forward.

Despite these challenges, Ross Stores reported a 3% increase in total sales for the quarter, although comparable store sales remained flat year-over-year. The operating margin held steady at 12.2%, but net income decreased to $479 million from $488 million in the previous year. Analysts and investors are closely watching the company’s strategies to mitigate the tariff impacts and manage inventory levels amidst ongoing economic uncertainties.

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