has been a laggard among off-price retailers, but
argues that the stock looks poised for a pop.
reiterated a Buy rating and $123 price target on
(ticker: ROST) Thursday, while also adding it to his firm’s short-term catalyst buy idea list.
Ross was hurt in part by its recent downbeat earnings; the results reflected the company’s exposure to California, which had stricter Covid-19 regulations in place throughout the holiday season. Yet that headwind looks likely to dissipate. Trussell writes that the next round of government stimulus will boost consumers’ spending power at a time when increasing vaccination rates makes them feel safer to shop outside the home.
The desire for refreshed wardrobes when the economy reopens should help Ross, he argues. “In addition, we are bullish on the medium- to longer-term market share potential of the off-price group, and we think Ross will be a key beneficiary of elevated discretionary demand once consumers start spending their record savings accumulated during the pandemic.”
Trussell notes that fellow off-price retailer
(BURL) delivered a strong quarter when it reported in early March, and while
((TJX)), like Ross, was more downbeat in its earnings, that company pointed to improving quarter-to-date trends on its call. The success of peers bodes well for Ross, he argues, as California lifts restrictions and more customers are vaccinated.
He thinks that Ross’s next report, due out in May, will be a catalyst for the shares as “the company will beat on both the top- and bottom-line, showcasing the strength and resilience of the off-price model.” Ross shares are down 0.3% to $123.29 in recent trading. The shares are up 3.4% since Barron’s recommended them earlier this month.
Write to Teresa Rivas at [email protected]