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Ross Stores Stock: Do Analysts See Further Upside?

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Stock movements so far

Ross Stores (ROST) stock fell 1.8% on May 24 as the company announced lower-than-expected earnings guidance for the second quarter of fiscal 2019 after the markets closed on May 23. Ross Stores exceeded analysts’ expectations for the first quarter of fiscal 2019, which ended on May 4. However, higher wages and freight costs hit the company’s margins in the first quarter.

On May 24, JPMorgan Chase raised its price target for Ross Stores stock to $102 from $97. Ross Stores stock has risen 18.4% on a year-to-date basis as of June 11 and outperformed the 15.1% rise in the S&P 500 Index.

The 12-month average price target of $101 for Ross Stores stock reflects that analysts see an upside potential of ~3% from its closing price on June 11.

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Analysts’ recommendations

On June 11, Ross Stores was rated as a “buy” by 16 out of 24 analysts, 67% of the analysts covering the off-price retailer. Eight analysts had given it “hold” recommendations, while none had given it “sells.” The consensus “buy” recommendation on Ross Stores by the majority of analysts reflects the company’s consistent performance even during challenging macro conditions. The company’s ability to provide a wide range of merchandise and deep discounts has helped it retain its existing customers and attract new traffic to its stores.

While several US retailers are closing their stores, off-price retailers such as Ross Stores and TJX Companies are expanding their presences.

In the first quarter of fiscal 2019, Ross Stores opened 22 new Ross Dress for Less stores and six dd’s Discounts stores and ended the quarter with 1,502 Ross Dress for Less stores and 243 dd’s Discounts locations. Ross Stores is on track to open 75 Ross Dress for Less stores and 25 dd’s Discounts stores in fiscal 2019. Ross Stores also plans to close or relocate about ten stores this year. In the long term, Ross Stores plans to operate a chain of 3,000 stores, including 2,400 Ross Dress for Less stores and 600 dd’s Discounts locations.

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