3 Ross Stores Analysts Offer Takes On Quarter, Disappointing Guidance

Zinger Key Points
  • The conservative outlook reflecting flat same store sales in 2023 is disappointing, one analyst said.
  • The company’s value proposition resonates with consumers against the backdrop of elevated inflation, another analyst stated.

Shares of Ross Stores Inc ROST declined sharply in early trading on Wednesday, despite the company reporting a sales and earnings beat for its fourth quarter.

  • Credit Suisse analyst Michael Binetti maintained an Outperform rating and price target of $123.
  • BMO Capital Markets analyst Simeon Siege reiterated an Outperform rating and price target of $113.
  • Telsey Advisory Group analyst Dana Telsey reaffirmed a Market Perform rating and price target of $120.

Check out other analyst stock ratings.

Credit Suisse

The company reported better-than-expected same store sales and EBIT margins, despite slightly disappointing gross margins, Binetti said in a note.

We’re disappointed that ROST’s conservatism results in SSS planned flat for 2023 – a rather bleak outlook for a company that should be gaining share as consumers shift to value-seeking,” the analyst wrote. “Ross Stores is likely to be in inventory “chase mode,” which should “drive leverage in both GM and SG&A well above plan."

BMO Capital Markets

“Shoes were best-performing category (home sales slightly above chain average),” Siege wrote in a note.

“As is typical, ROST introduced guidance below the Street (which even includes a 53rd week and higher interest income) but what we expect will prove conservative,” the analyst said. “With tight inventory and ongoing share opportunity, we continue to see ROST as a LT share taker."

Telsey Advisory Group

“ROST beat expectations in Q4 driven by stronger sales and operating expense leverage, while gross margin contracted slightly,” Telsey said.

“However, the FY23 and 1Q23 guides both missed consensus expectations, evidence that macro pressures and an increasingly competitive environment continue to weigh,” she mentioned. “We continue to believe that ROST's value proposition resonates with consumers, particularly as macro and inflationary pressures remain elevated."

ROST Price Action: Shares of Ross Stores had declined by 2.14% to $108.17 at the time of publication Wednesday.

Image: Wikimedia Commons

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Posted In: Analyst ColorEarningsNewsReiterationTop StoriesAnalyst RatingsMoversTrading IdeasBMO Capital MarketsCredit SuisseDana TelseyMichael BinettiSimeon SiegeTelsey Advisory Group
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