Analysts See Growth Potential In Ross Stores Amid Holiday Season Optimism: Details

Core Viewpoint - Ross Stores, Inc. reported third-quarter results with an EPS of $1.48, surpassing the consensus of $1.40, while sales of $5.07 billion fell short of the expected $5.15 billion. The company provided fourth-quarter EPS guidance of $1.57 – $1.64, below the consensus of $1.67, and FY25 EPS guidance of $6.10 – $6.17, slightly above the street view of $6.14 [1]. Group 1: Analyst Ratings and Price Targets - BofA Securities analyst Lorraine Hutchinson reiterated a Buy rating with a price target of $180 [2]. - Telsey Advisory Group analyst Dana Telsey maintained a Market Perform rating with a price target of $175 [4]. - Guggenheim analyst Robert Drbul also maintained a Buy rating with a price target of $180 [7]. - BMO Capital Markets analyst Simeon Siegel kept an Outperform rating with a price target of $168 [11]. Group 2: Earnings and Guidance Analysis - The earnings beat was attributed to margin tailwinds, despite sales falling short due to unfavorable weather and product assortment issues [4]. - The fourth-quarter guidance reflects a timing shift in packaway expenses and the impact of last year's extra week, which contributed positively to EPS in the prior year [3]. - Management lowered its fourth-quarter EPS guidance but slightly raised the FY EPS high-end by $0.03, indicating a conservative outlook [12]. Group 3: Market Conditions and Consumer Behavior - The company continues to attract value-seeking customers, although macroeconomic uncertainty and price sensitivity among its core demographic pose challenges [6]. - Analysts expect Ross to maintain positive sales momentum during the holiday season, driven by gifting and seasonal items [9]. - The impact of persistent inflation on discretionary spending has led to a slight reduction in FY24 revenue forecasts [8]. Group 4: Future Projections - Analysts have adjusted EPS estimates for FY24, FY25, and FY26 to $6.19, $6.54, and $7.14, respectively, reflecting quarterly results and slight margin forecast updates [10]. - The appointment of a new CEO effective February 2025 is seen as an additional catalyst for the company [10].