Ross Stores' Price Target Raised by Guggenheim Analyst After Strong Q4 Results

Guggenheim's Robert Drbul raised their price target on Ross Stores (NASDAQ: ROST) by 17.9% from $140 to $165 on 2024/03/06. The analyst maintained their Strong Buy rating on the stock.

Drbul's price target hike followed Ross Stores' strong fourth-quarter and fiscal year 2023 results, which were announced on March 5, 2024. The company reported earnings per share (EPS) of $1.82 for Q4 2023, beating the Zacks Consensus Estimate of $1.63 and showing a substantial increase of 38.9% compared to the previous year's EPS of $1.31. Revenue for the quarter came in at $6.023 billion, surpassing the Zacks Consensus Estimate of $5.778 billion and representing a 15.5% increase from the previous year's revenue of $5.214 billion. Comparable store sales also showed positive growth, with a 7% year-over-year increase.

For the fiscal year 2023, Ross Stores reported EPS of $5.56, up from $4.38 in the previous year, and revenue of $20.377 billion, a 9% increase from the previous year's revenue of $18.696 billion. The company also repurchased 8.2 million shares for $950 million during the fiscal year.

Looking ahead, Ross Stores' management provided guidance for the first quarter of 2024, expecting EPS in the range of $1.29 to $1.35, compared to $1.09 in the first quarter of 2023. They also projected a 2% to 3% increase in comparable store sales for the quarter. For the full fiscal year 2024, the company anticipates EPS in the range of $5.64 to $5.89 and same-store sales growth of 2% to 3%, a more conservative outlook compared to the 5% growth seen in fiscal year 2023.

CEO Barbara Rentler expressed satisfaction with the company's Q4 sales and earnings results, attributing the above-plan sales to customers' positive response to improved assortments of quality branded bargains throughout their stores. Rentler also highlighted the growth in operating margin, which increased by 165 basis points to 12.4% compared to the previous year. However, she acknowledged ongoing uncertainty in the macroeconomic and geopolitical environments, as well as the impact of elevated costs on customers' discretionary spending.

Apart from Guggenheim's Robert Drbul, several other analysts also updated their ratings and price targets for Ross Stores on March 6, 2024. Jefferies' Corey Tarlowe raised the price target by 8.9% to $147 and maintained a Hold rating on the stock. Telsey Advisory Group's Dana Telsey increased the price target by 18.5% to $160 and also maintained a Hold rating. UBS's Jay Sole raised the price target by 2.1% to $145 and maintained a Hold rating.

According to data from WallStreetZen, 81.3% of top-rated analysts currently rate Ross Stores as a Strong Buy or Buy, while 18.8% consider it a Hold. No analysts recommend or strongly recommend selling the stock. The consensus forecast among analysts is that Ross Stores will deliver earnings per share (EPS) of $5.39 for the upcoming year, representing a 6.1% increase on a year-over-year basis.

Since Ross Stores' latest quarterly report on March 5, 2024, the stock price has experienced a slight decline of 0.7%. However, on a year-over-year basis, the stock has shown significant growth, with a 31.8% increase. During the same period, Ross Stores has outperformed the broader market, as the S&P 500 has risen by 26.1%.

Ross Stores, Inc. is an off-price retail apparel and home fashion company operating under the Ross Dress for Less and dd's DISCOUNTS brand names. The company offers a range of products, including apparel, accessories, footwear, and home fashions. As of July 5, 2022, Ross Stores operated approximately 1,950 stores across 40 states, the District of Columbia, and Guam. The company was incorporated in 1957 and is headquartered in Dublin, California.

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