On Monday, Roth/MKM adjusted its outlook on BJ's Wholesale (NYSE:BJ), increasing the stock price target to $68 from the previous $63 while maintaining a Neutral rating on the stock. The firm's analyst cited recent performance and market conditions as factors influencing this decision.
In a recent report, the analyst acknowledged BJ's introduction of a long-term algorithm in March 2023, which includes expectations for low to mid-single-digit comparable sales growth. Despite this, the analyst projected that BJ's might perform below its plan for the immediate two years.
Last week's fourth-quarter results showed promising signs, with an uptick in customer traffic contributing three percentage points to comparable sales, and unit sales also trending positively. This acceleration in traffic during the quarter was seen as a positive indicator for the company.
Nevertheless, the analyst also pointed out several challenges that BJ's may face in the near future. The onset of 2024 is expected to bring deflation, which could pose risks along with potential consumer pressure and heightened competition in the market.
In light of these factors, Roth/MKM reiterated its Neutral stance on BJ's Wholesale but raised the stock price target to $68. This adjustment reflects a balance between the positive fourth-quarter performance and the anticipated headwinds the company may encounter.
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