TD Cowen analyst John Kernan has maintained their bullish stance on ROST stock, giving a Buy rating on February 24.
John Kernan has given his Buy rating due to a combination of factors that highlight Ross Stores’ potential for growth and value. He notes that the valuation gap between Ross Stores and its competitor TJX is significant, despite Ross Stores’ ability to achieve similar growth in same-store sales, earnings per share, return on invested capital, and free cash flow. This discrepancy suggests that Ross Stores is undervalued compared to its peers.
Additionally, Kernan acknowledges the challenges posed by factors such as tariffs, immigration, and deportation, which have affected market sentiment. However, he points out that Ross Stores has a strong presence in states with high numbers of undocumented immigrants, which could be a strategic advantage. Furthermore, Ross Stores has a higher overlap with consumers using food stamps, indicating its appeal to value-conscious shoppers. The company’s solid financial performance, with a return on invested capital of 32% and annual revenue of $22 billion, along with the leadership of CEO Jim Conroy, who is expected to bring fresh perspectives and transparency, further supports the Buy rating.
In another report released on February 24, J.P. Morgan also maintained a Buy rating on the stock with a $166.00 price target.