UBS Upgrades Stock Rating for Ross Stores

As the growth pace of discount stores in the US retail sector is monitored, strong support came for the stock from the brokerage front. Investment firm UBS raised its rating on Ross Stores (ROST), which it had previously kept at neutral, forecasting 2-year compound 8.5% revenue growth for the company.

Why did Ross Stores shares rise?

Analist Jay Sole and his team stated that the company's same-store sales growth momentum could extend beyond this year. Anticipating that the market will make upward revisions to earnings per share estimates, the firm pointed to new steps implemented by Ross Stores management. The company aims to close the productivity gap with its competitor TJX Companies (TJX) through merchandising, in-store operational improvements, and increased marketing spending.

What does UBS project for Ross Stores?

Drawing attention to the history of the productivity gap between the 2 retail chains, the analysis noted that from metrics at similar levels in 2017, by the end of 2025 TJX had increased its productivity by 44%, while Ross Stores remained at 24%. The brokerage firm emphasized that the market has not yet sufficiently priced in the contribution that closing this gap will make to sales in fiscal year 2027 and beyond.

The increase in the rating was directly reflected in session trading. Ross Stores shares rose 3.4% to $237.14 in the morning session on the 1st trading day of the week.

This content is for information purposes only and does not constitute investment advice.