Ross Stores upgrade points to productivity gains under new CEO

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Ross Stores productivity upgrade

Highlights

UBS upgraded Ross Stores to buy from neutral and raised its price target to $315 from $239, implying 37% upside.
UBS projects productivity and operational improvements at Ross could support compound annual revenue growth of 8.5% over the next two years—260 basis points above consensus.
Ross shares are down 4% in three months; LSEG data shows 14 of 21 analysts rate the stock buy or strong buy, suggesting optimism on future execution.

UBS backs operational improvement story

As reported by CNBC, citing UBS, the investment bank upgraded Ross Stores to buy from neutral and raised its price target to $315 from $239, implying 37% upside from Friday's close.

Analyst Jay Sole said in a note to clients on Monday that the central question for Ross is whether its recent same-store sales growth momentum can continue beyond this year, and that UBS believes it can. The bank said Ross has trailed TJ Maxx on productivity by a wide margin, but that changes in merchandising, marketing and in-store operations should help narrow that gap.

James Conroy joined Ross Stores in February 2025. UBS said that by the end of that year Ross' productivity had risen 24%, while its competitor's had increased 44%.

Sales outlook and market view

UBS said the market is underestimating how much further productivity gains at Ross could support same-store sales growth in fiscal 2027 and beyond. As those improvements continue, the bank expects Ross to grow revenue at a compound annual growth rate of about 8.5% over the next two years.

That forecast is roughly 260 basis points above the Street consensus estimate for Ross revenue, according to UBS. The bank's positive stance broadly aligns with analyst sentiment, with LSEG data showing 14 of the 21 analysts covering Ross Stores rate the stock buy or strong buy, while seven maintain hold ratings.

Ross shares have fallen 4% over the past three months, leaving room for further gains if the company's execution improvements translate into stronger comparable sales and revenue growth.

UBS Global Wealth Management’s extended Fed tightening-cycle forecast highlighted how persistent inflation could keep interest rates higher for longer, with additional hikes expected into March 2027. Our earlier article noted that firmer goods and services inflation, alongside risks such as AI-driven demand and supply disruptions, could reinforce restrictive policy—an important backdrop for equity valuations and retailer demand sensitivity to borrowing costs.

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