Oliver Chen, an analyst from TD Cowen, maintained the Buy rating on Bj’s Wholesale Club Holdings (BJ – Research Report). The associated price target was raised to $135.00.
Oliver Chen has given his Buy rating due to a combination of factors that highlight the strong performance and growth potential of BJ’s Wholesale Club Holdings. The company reported a solid fourth-quarter earnings per share of 93 cents, surpassing the market’s expectations of 88 cents. This performance was driven by a 5% increase in core comparable sales, which exceeded the anticipated 3% growth, supported by a 3 percentage point increase in traffic, unit gains, and a positive ticket. Additionally, BJ’s impressive 90% renewal rate and 8% growth in membership income underscore its ability to scale effectively beyond its current 250 clubs.
Furthermore, the valuation of BJ’s at 26 times the forward price-to-earnings ratio is considered attractive, especially when compared to its peers like Walmart and Costco. The company’s management plans to expand by adding 25 to 30 new clubs over the next year, suggesting a 6% unit growth annually for the next two years. This expansion, coupled with strong performance in general merchandise and grocery sales, positions BJ’s well to capitalize on consumer trends and maintain its competitive edge. The strategic focus on value-conscious members and the success of initiatives like Fresh 2.0 further bolster the company’s growth outlook, justifying the Buy rating.
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