Ross Stores, Inc. (ROST) PT Raised to $185 at Goldman Sachs
Goldman Sachs analyst Brooke Roach raised the price target on Ross Stores, Inc. (NASDAQ: ROST) to $185.00 (from $167.00) while maintaining a Buy rating.
The analyst comments "ROST reported a strong F2Q beat, led by sequentially stronger momentum at both the Ross and dd's banners. Management highlighted the company's stronger value offering continues to resonate with their core customer, driving healthy top line growth and associated cost leverage. While merchandise margins contracted in the quarter (in line with plans given ROST's branded, value merchandise elevation strategy), supply chain efficiencies and lower incentive costs more than offset this pressure which drove strong EBIT margin expansion. Looking ahead, these incremental distribution and supply chain efficiencies will continue into 2H. Net, ROST raised its FY EPS outlook to $6.00-$6.13 (from $5.79-$5.98 prior) which reflects 2Q flow-through and improved 2H margins. We step away from the quarter increasingly constructive on the stock. ROST's heightened focus on offering branded value merchandise at sharper prices has proven successful amidst a more challenging consumer backdrop, and the company delivered a sequentially improving comp on both a 1-yr and 2-yr stack basis. We believe this momentum will continue into 2H, with ROST continuing to take market share. While management expects this strategy to result in additional merchandise margin pressure moving forward, we are encouraged by management's outlook for incremental efficiencies in distribution and supply chain which will help offset this investment. We stay Buy rated and raise our 12-month price target to $185."