Ross Stores downgraded to Equal Weight from Overweight at Morgan Stanley

Morgan Stanley analyst Alex Straton downgraded Ross Stores (ROST) to Equal Weight from Overweight with a price target of $140, down from $164. Against record gross margins, the firm thinks softlines profitability expansion “will be harder to come by” in 2025, which places the burden on sales growth acceleration and/or expense reduction. This setup makes 2025 more of a stock-picking environment in softlines, and also means the dispersion between leaders and laggards likely continues to widen, the analyst tells investors in a research note. As a result, Morgan Stanley adjusted ratings in the sector as part of its 2025 outlook. It is expecting a “more-of-the-same” softlines demand backdrop, but cautions profitability improvement may prove harder to come by this year.