On Monday, UBS has increased the price target for BJ's Wholesale Club Holdings Inc. (NYSE:BJ) shares, setting the new goal at $89 up from the previous $81, while sustaining a Buy rating for the stock. The revision comes in the wake of the company's recent fourth-quarter earnings report.
BJ's Wholesale, known for its membership-based retail warehouses, has reportedly navigated the past quarter with results that, while modest, have outperformed tempered investor expectations in a challenging economic environment. The company's long-term financial algorithm, which includes mid-single-digit revenue growth and high-single to low-double-digit EPS growth, is seen as attainable over time according to UBS.
The company has provided guidance for the upcoming year that UBS considers to be realistic, with projections of 1-2% core comparable store sales growth and a 20 basis point expansion in merchandise margin. Additionally, BJ's anticipates a slight increase in selling, general, and administrative (SG&A) costs, alongside an earnings per share (EPS) forecast of $3.75 to $4.00. This EPS estimate represents approximately a 1.7% adjusted year-over-year growth at its midpoint, after adjusting for an extra week in the fiscal year 2023.
UBS also estimates that, including fuel sales, BJ's guidance implies around a 20 basis point compression in operating margin at the midpoint of their expectations. This detail aligns with the company's anticipated performance in the face of current market conditions. The updated price target reflects confidence in BJ's ability to meet its outlined financial targets and continue its growth trajectory.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.