Morgan Stanley raised its price targets on key retail stocks, including AutoZone (AZO), Ulta Beauty (ULTA) and Ollie's Bargain Outlet (OLLI), highlighting challenges and growth opportunities.
AutoZone continues to "gain" market share through mega hub expansion and IT investments, despite "soft" domestic sales trends, Morgan Stanley said in a Wednesday report.
The investment firm reiterated its overweight rating and raised the price target to $3,490 from $3,125, citing confidence in AutoZone's high return on invested capital, or ROIC, and international growth potential.
For Ulta Beauty Morgan Stanley sees "increased competitive intensity" in both Prestige and Mass segments, despite posting solid Q3 results, driven by gross margin improvement. The firm also anticipates Ulta to face challenges in operating margins and medium-term earnings per share growth.
Morgan Stanley raised it raised its price target on ULTA to $430 from $400, while reiterating an equal-weight rating.
Ollie's Bargain Outlet benefits from consistent EPS growth as it executes its store expansion strategy, though challenges remain in maintaining strong margins amid execution risks and supply dynamics in the closeout market, Morgan Stanley said.
The firm reiterated an equal-weight rating on Ollie's stock and raised its price target to $108 from $100.
Price: 3340.88, Change: -6.28, Percent Change: -0.19
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