Goldman Sachs Removes Ross Stores From 'Conviction List,' Maintains At Buy

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Stephen Grambling of Goldman Sachs removed shares of
Ross StoresROST
from the Goldman Sachs “Conviction List” but maintained a Buy rating with a $99 price target. “We continue to view Ross Stores as a long-term secular winner, with opportunity to grow its store base, expand margins and improve return on invested capital,” Grambling wrote in a note. The analyst adds that in the near-term, the company's fundamentals are inflecting with easy comparisons over the coming quarters. In addition, the company has the lowest leverage among its peers at 1.6x rent-adjusted debt/EBITDAR (compared to the group's 2.6 multiple) that provides the company flexibility to “ramp” buybacks or dividends. However, Grambling felt it necessary to remove shares from the “Conviction List.” The analyst notes that his “thesis has started to unfold” since shares were initially added to the “Conviction List” in 2013. Shares gained 31 percent since the addition, outperforming the S&P 500's 25 percent return and the analyst's Broadline retail coverage that has risen 19 percent.
Posted In: NewsBroadline RetailConviction ListretailersRoss StoresStephen Grambling
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