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BJ's Wholesale Club's Stock Breakout Linked to Sustained Comparable Sales Growth, BofA Says

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BJ's Wholesale Club's Stock Breakout Linked to Sustained Comparable Sales Growth, BofA Says

BJ's Wholesale Club (BJ) stands to benefit from the current inflationary environment, though the warehouse club operator must demonstrate a sustained acceleration in comparable sales to trigger a stock breakout, BofA Securities said in a Wednesday note.

Gasoline prices in the US have surged as supply disruptions caused by the Middle East conflict pushed crude oil costs higher. Consumers don't see an immediate relief as the Strait of Hormuz, the most important chokepoint for energy flows, remains largely shut due to the US-Israel war with Iran.

The warehouse club model could benefit from the oil price shock as consumers prioritize value, BofA analysts Christopher Nardone and Madeline Cech wrote. "That said, for (BJ's) to (break out), we think the market needs to see evidence of comp consistency and improvement," the duo wrote.

In addition to in-store discounts on bulk purchases, BJ's offers lower gas prices to members at its gas stations.

In March, BJ's projected fiscal 2026 comparable club sales, excluding gasoline, to grow 2% to 3% over the previous year. The metric rose 2.6% in fiscal 2025.

"Higher for longer gas prices could drive potential upside to our (fiscal 2026) comp ex gas forecast of 2.5%, but the lack of visibility on the longevity of the (Iran) war makes it harder to underwrite the benefits from higher gas prices," according to the BofA note.

BofA reinstated coverage on the stock with a neutral rating and a $110 price target.

"On a (less than) 3% comp ex gas, given the company's supply chain investments and store growth, upward estimates revisions are unlikely," Nardone and Cech said.

BJ's is scheduled to release its fiscal first-quarter results on Friday.

Price: $96.69, Change: $-0.97, Percent Change: -0.99%

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