Bullish indicating open at $55-$60, IPO prices at $37
On Monday, Evercore ISI adjusted its price target for Ross Stores, Inc. (NASDAQ: NASDAQ:ROST), decreasing it to $160 from the previous $170, while maintaining an Outperform rating on the company’s shares. The revision followed Ross Stores’ first-quarter earnings report, which showcased a solid performance despite a challenging start in February. The stock, currently valued at $137.26, has experienced a significant 10.24% decline over the past week. According to InvestingPro data, Ross maintains a perfect Piotroski Score of 9, indicating strong financial health, though 11 analysts have recently revised their earnings estimates downward.
The company reported earnings per share (EPS) of $1.47, slightly above the consensus estimate of $1.44 and Evercore ISI’s estimate of $1.46. Same-store sales (SSS) remained flat, which may not have exceeded some investors’ expectations, but showed a significant improvement from the more than 3% decline anticipated in March. Current trends suggest SSS could be at the upper end of the second-quarter guidance, ranging from flat to a 3% increase. The specialty retailer, with a market capitalization of $45.14 billion and trailing twelve-month revenue of $21.26 billion, maintains a healthy gross margin of 32.71%. InvestingPro subscribers can access detailed financial health metrics and 12 additional exclusive ProTips about Ross Stores.
According to Evercore ISI, the more pressing issue for Ross Stores is the outlook for the second quarter and the full year, which has been affected by uncertainties related to inventory management and tariffs. The company has withdrawn its 2025 guidance, a decision that Evercore ISI attributes more to inventory concerns than the direct financial impact of tariffs. This contrasts with TJX Companies (NYSE:TJX), which reportedly began reducing its exposure to China well before the tariff issues arose.
Evercore ISI has also adjusted its second-quarter EPS forecast for Ross Stores to $1.58, down from $1.72, to account for the anticipated impact of tariffs, which is estimated to be between 90 basis points to 120 basis points, and additional challenges related to packaway inventory accounting. The firm has likewise lowered its 2025 EPS estimate for Ross Stores to $6.35 from $6.70, reflecting these concerns.
In other recent news, Ross Stores reported its first-quarter 2025 earnings, revealing 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, while revenue reached $5 billion, exceeding the anticipated $4.94 billion. Despite these positive results, Ross Stores withdrew its annual guidance due to ongoing economic uncertainties, including anticipated tariff impacts. Analysts from Jefferies, TD Cowen, and Bernstein have weighed in on Ross Stores’ financial outlook, with Jefferies reducing the price target to $135 and maintaining a Hold rating, while TD Cowen adjusted their target to $161 with a Buy rating, and Bernstein kept a Market Perform rating with a $147 target. The impact of tariffs, especially due to Ross Stores’ reliance on Chinese imports, was a common concern among analysts, as it is expected to pressure merchandise margins in the coming quarters. Ross Stores faces challenges in managing these tariff pressures, with an estimated impact on gross margins between 90 to 120 basis points in the second quarter. Despite these challenges, Ross Stores continues to focus on strategic sourcing and maintaining its value proposition to attract cost-conscious consumers.
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