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Investing.com - UBS lowered its price target on BJ’s Wholesale (NYSE:BJ) to $120.00 from $125.00 while maintaining a Buy rating on the stock. BJ’s shares currently trade at $91.61, down 24% from their 52-week high of $121.10, though InvestingPro data shows the stock appears fairly valued based on its proprietary Fair Value model.
The firm noted that BJ’s demonstrated the continued relevance of its business model despite skepticism about its ability to accelerate same-store sales growth. UBS highlighted the company’s notable progress on general merchandise comparable sales, even as it began restraining purchases in certain home and seasonal categories. This comes as BJ’s posted modest revenue growth of 2.82% in the last twelve months, reaching $21.16 billion.
BJ’s showed solid advancement in its membership metrics and continued to gain traction with its Fresh 2.0 initiative across both produce and meat & seafood departments. The company also reaffirmed plans to open seven stores to complete fiscal year 2025, addressing concerns about meeting its target of adding 20-25 locations by the end of next year.
UBS acknowledged near-term challenges, including questions about the company’s fourth-quarter general merchandise outlook and its ability to narrow the comparable sales gap with competitors Costco and Sam’s Club. The price target adjustment reflects a valuation based on UBS’s fiscal 2027 earnings estimates. With a current P/E ratio of 20.88 and PEG ratio of 5.22, InvestingPro identifies BJ’s as trading at a high P/E ratio relative to near-term earnings growth. Discover more insights in BJ’s comprehensive Pro Research Report, available with a subscription.
The firm maintains that BJ’s is well-positioned to benefit from broader trends of consumers seeking value in the club channel, and expects the company to return to its long-term algorithm of low-mid-single-digit comparable sales growth and high-single to low-double-digit earnings per share growth in fiscal 2027. Despite current challenges, BJ’s maintains a "GOOD" overall financial health score of 2.62 according to InvestingPro metrics.
In other recent news, BJ’s Wholesale Club reported its third-quarter earnings for 2025, surpassing earnings per share (EPS) expectations with an EPS of $1.16 compared to the forecasted $1.10. The company’s revenue matched expectations, coming in at $5.35 billion. Despite these positive results, the stock experienced a pre-market decline, influenced by broader market conditions. In analyst updates, Morgan Stanley lowered its price target for BJ’s Wholesale to $105, citing the impact of ongoing investments to maintain competitiveness. Meanwhile, Evercore ISI raised its price target to $95, highlighting BJ’s focus on member satisfaction as a long-term strategy. TD Cowen also adjusted its price target to $108, noting that BJ’s comparable sales growth of 1.8% fell short of market expectations. However, TD Cowen pointed out that the performance of new stores was a positive aspect. These developments reflect BJ’s strategic efforts and market reactions in the current economic environment.
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