Wall Street's analysts weighed in on the Dublin, Calif., company's second quarter and guidance.
Analysts at Cowen maintained an outperform rating while lowering Ross's price target to $144 a share from $147.
"Second-half guidance is conservative but implies a swing in [earnings before interest and taxes] margin from slight expansion in first-half 2021 vs. fiscal 2019 to [3 percentage points-plus] of contraction in second-half 2021 given higher supply-chain inflation," Cowen analyst John Kernan said.
That outlook contrasts with consensus estimates for (TJX) - Get TJX Companies Inc Report, which didn't provide guidance, and Burlington Stores (BURL) - Get Burlington Stores, Inc. Report, which in May said it expected EBIT margin to contract 0.2 to 0.3 percentage point due to faster freight and supply-chain costs, according to Kernan.
Wells Fargo analyst Ike Boruchow affirmed an overweight rating and $135 price target on Ross Stores. "Robust" second-quarter results were "far surpassing" company sales and margin guidance, but there is room for concern as management took a "highly cautious tone" on the rest of the year.
"We get it, [the second half] has headwinds -- but we view this second-half outlook as a tad overly conservative following such a strong second quarter -- not an atypical approach for this management team," Boruchow said.
Jefferies analyst Janine Stichter maintained her hold rating and $131 price target as she also said third-quarter guidance was soft but "typical" of the company's conservative style.
The company's off-price inventory is a "long-term secular winner," but she still prefers TJX and Burlington, "where we see more significant growth and margin opportunities over the near- and long-term."
Ross Stores shares at last check were 3.5% lower at $122.10.