Ross Stores upgraded to ‘Buy’, Burlington still ‘top pick’ at Wells Fargo
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Ross Stores (NASDAQ:ROST) and Burlington Stores (NYSE:BURL) are safe bets as off-price retail looks primed for growth into 2023, according to Wells Fargo.
Citing improving dynamics in terms of growing inventory availability from popular brands, consumer trade-down, and margin improvement as freight headwinds abate, the off-price retail space is seen as particularly attractive. The team of analysts led by Ike Boruchow added that valuations for both Burlington (BURL) and Ross Stores are particularly attractive within that space.
While we have been fairly downbeat on the prospects for off-price over the past 12+ months, we continue to gain optimism into the setup in the sub-sector into 2023 and beyond,â the team wrote on Tuesday. âSimply put, we believe BURL and ROST are the best ways to play our bullish off-price thesis.â
As such, Ross Stores (ROST) was upgraded to a âBuyâ rating while Burlington Stores (BURL) was reiterated as a âtop pickâ at the bank. Shares of the former rose 4.43% in premarket trading while the latter jumped 6.26% on light volume.
It is worth noting that the analysts remained cautious on TJX Companies (TJX), retaining a Hold-equivalent rating on the name. 
âTJX's ability to maintain margins and guidance in the face of macro headwinds made them the better stock this year...but not necessarily in 2023,â the research explained. âThe stock has held in materially better, margins have been fairly stable and there is a consensus that momentum in both comps and AUR are sustainable.â
Read more on retail expectations into year-end.