Ross Stores (NASDAQ:ROST) was lifted to Outperform from Market Perform at TD Cowen on Thursday, with the firm's analysts lifting the price target to $128 from $113 per share.
They said they believe the company's guidance looks conservative, and they feel its valuation can move higher.
"Our proprietary data shows Off-Price is significantly outpacing overall Retail traffic as value proposition resonates, while the availability of inventory is increasing based on our work," the analysts wrote.
"Our data for traffic suggests that ROST's comp guidance for Q2:23 is conservative as Ross reported getting sharper on price points to reflect better-branded values for its customers," they added.
The analysts believe consensus is underestimating ROST's margin recovery due to supply chain cost deflation, accelerating same-store sales and improving store productivity.