Ross Stores’ (ROST) annual guidance boost could set it apart this earnings season with Q4 numbers likely to avoid a post-print decline, Morgan Stanley said in a note e-mailed Friday.
The revised FY guidance indicates a Street EPS increase of approximately low-single-digit percentage points, while 4Q remains largely unchanged. Morgan Stanley considers it a pivotal factor contributing to the positive 6% after-market close reaction.
Additionally, the positive outlook is based on conservative 4Q/FY guidance and “the fact that the margin recapture
opportunity is perhaps more credible with revenue acceleration continuing on an underlying basis,” Morgan Stanley said.
Morgan Stanley expects significant upside to the revised Q4 guidance for the company. Ross Stores’ revised Q4 EPS guidance is now in range of $1.56 to $1.62. “We now model $1.69 EPS, & see potential upside even beyond that level,” Morgan Stanley said.
Morgan Stanley maintained its overweight rating on the company’s stock, and lifted its price target to $137 from $131.