Ross Stores (ROST) could continue gaining market share and outgrowing department store peers over the next several years amid strong consumer demand for value-focused retail, UBS said in a Thursday note.
UBS said it expects slightly higher full-year gross margins for Ross Stores, driven by stronger merchandise margins and lower tariff costs, though gains could be partly offset by higher freight and store expenses.
"We believe ROST is capable of outgrowing Department Store peers over the next few years," UBS analysts said, adding Ross' initiatives "could fuel further outsized growth for a multiyear period."
However, UBS said Ross' valuation and investor positioning may limit upside. "We continue to rate ROST Neutral and see a balanced upside/downside skew," the analysts said.
UBS maintained its neutral rating and raised its price target to $232 from $227.
Price: $231.88, Change: $+14.69, Percent Change: +6.76%