Recent analysts’ activity
Several analysts revised their price target for Ross Stores (ROST) stock after the company announced its results for the fourth quarter of fiscal 2018 in March. The company’s sales grew 1.0% in the fourth quarter and 6% in full-year fiscal 2018. The company issued a conservative outlook for fiscal 2019 and expects sales growth in the range of 5% to 6%. Fiscal 2019 same-store sales growth is forecasted in the range of 1% to 2%.
Following the results, Jefferies raised its price target for Ross Stores stock to $90 from $86 on March 6. Credit Suisse increased its price target to $100 from $95. D.A. Davidson revised its price estimate to $92 from $84. UBS lowered its price target to $94 from $95 on March 19 and further cut it down to $93 on March 25. Cowen and Company upped its price estimate to $115 from $110 on April 17. As of April 26, Ross Stores stock was up 18.4% on a year-to-date basis. The average price target for Ross Stores stock is $100, which indicates an upside potential of about 1.0%.
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Consensus “buy” rating
The majority of analysts covering Ross Stores stock have a “buy” rating, while the stock doesn’t have any “sell” ratings. As of April 26, Ross Stores was rated a “buy” by 15 (or 68%) out of 22 analysts, while seven analysts had a “hold” recommendation.
Ross Stores has consistently delivered same-store sales growth over the past several years even when other retailers have been struggling to survive in a challenging retail environment where online retailers are grabbing market share. Ross Stores in fact doesn’t even have an e-commerce site, in contrast to other retailers and department stores that are investing heavily in enhancing their digital capabilities to boost online sales.
Ross Stores has a strong off-price model, which consists of stores under the brands Ross Dress for Less and dd’s DISCOUNTS. These stores attract customers by selling merchandise at deep discounts compared to department stores and specialty retailers. Opportunistic buying and efficient inventory management allow Ross Stores to offer fresh merchandise to customers at great prices.
Ross Stores operated 1,480 Ross Dress for Less stores and 237 dd’s DISCOUNTS stores as of the end of fiscal 2019. The company aims to grow its Ross Dress for Less brand to 2,400 locations and sees the opportunity to expand dd’s DISCOUNTS stores to 600 locations over the long term.