UBS raises Ross Stores stock price target on tariff refunds, sales

UBS increased its price target for Ross Stores, Inc. (NASDAQ:ROST) to $239 from $232, while retaining a Neutral rating on the shares. The company surpassed UBS's Q2 fiscal 2026 EPS forecast by 80 cents, thanks to a 60-cent boost from tariff refunds. This drives approximately 15% of the raised fiscal 2026 EPS estimate. Ross Stores' stock has gained 59% in the past year, but InvestingPro analysis indicates it is currently overvalued relative to its Fair Value.

Analysts have revised their earnings upward for the upcoming period, with 6 analysts contributing to this positive earnings momentum. UBS has also revised its second-half fiscal 2026 revenue outlook positively, citing strong comparable store sales in the August month-to-date and higher store openings. Gross margins for the full year are expected to rise slightly, primarily due to improved merchandise margins.

The Q2 benefit from tariff refunds raises UBS's fiscal 2026 operating margin forecast by 150 basis points. Ross Stores' fiscal 2027-2028 EPS estimates have increased by around 3%, thanks to the higher fiscal 2026 base. The company reported stronger-than-expected Q2 results, with EPS of $2.66, beating estimates of $1.94, and revenue of $6.3 billion, exceeding the forecast of $6.15 billion.

Comparable store sales surged by 10%, driven by increased customer traffic and spending. Ross Stores raised its full-year outlook due to this growth. Citi raised its price target for Ross Stores to $290, maintaining a Buy rating, pointing to strong sales growth and gross profit dollar growth of 16%. UBS adjusted its price target to $239 from $232, noting the significant benefit from tariff refunds that contributed to the earnings beat.

Ross Stores' EPS, excluding the tariff refund, was $2.06, surpassing the consensus estimate of $1.94. These developments indicate positive momentum for the retailer, as it continues to outperform expectations.