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Investing.com - UBS maintained its Neutral rating on Ross Stores, Inc. (NASDAQ:ROST), a prominent player in the Specialty Retail industry with a market cap of $43 billion, setting a price target of $144.00, according to a research note released Tuesday. The company currently trades at $131.70, with InvestingPro data showing strong financial health metrics.
The investment firm expects Ross Stores to outgrow department store competitors over the next few years, projecting approximately 4.5% compound annual growth rate (CAGR) for earnings per share over a five-year period. This outlook aligns with the company’s current revenue growth of 2.5% and historical 5-year revenue CAGR of 6%.
UBS believes this growth outlook justifies a price-to-earnings ratio of about 21x for the discount retailer, noting a positive bias toward the stock despite maintaining the Neutral rating. According to InvestingPro, which offers comprehensive analysis of 1,400+ stocks, the current P/E ratio stands at 20.59x, with a PEG ratio of 3.05x suggesting relatively high valuation compared to growth rates.
The firm explained its rating decision by stating that market sentiment appears to align with its own view of the company’s prospects, limiting potential for significant upside surprises.
UBS also highlighted that potential U.S. tariff situations could create inventory dislocations across the retail landscape in calendar year 2026, which should benefit Ross Stores’ business model.
In other recent news, Ross Stores, Inc. reported a solid first-quarter earnings performance with earnings per share (EPS) of $1.47, slightly surpassing consensus estimates of $1.44. Same-store sales remained flat, showing improvement from the anticipated decline. The company has entered a new $1.3 billion revolving credit facility, replacing a prior agreement, with Bank of America acting as the administrative agent. Jefferies recently upgraded Ross Stores from Hold to Buy, citing a significant margin opportunity and a wide valuation gap compared to peers. JPMorgan raised its price target for Ross Stores to $154, maintaining an Overweight rating, and highlighted the company’s new strategy focused on marketing and store experience improvements. Meanwhile, UBS maintained a Neutral rating with a price target of $144, noting a balanced potential for upside and downside. Evercore ISI adjusted its price target to $160 from $170, maintaining an Outperform rating, and noted concerns about inventory management and tariffs affecting future guidance. These developments reflect a mix of optimism and caution surrounding Ross Stores’ growth outlook and strategic initiatives.
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