BJ's Wholesale Club (BJ) sales momentum will be offset by an expected slowdown in earnings growth next fiscal year, BofA Securities analysts said in a note on Wednesday.
The company is scheduled to report its fiscal Q3 financial results on Nov. 20.
Analysts said BJ's $240 million one-time benefit from its credit card interchange-fee settlement is expected to be recognized in Q3 but not included in the guidance. They expect the windfall to provide BJ with flexibility to fund incremental price investments.
BofA increased BJ's Q3 earnings estimate to $1.25 from $1.20 to reflect higher gas prices flowing through the model. FactSet analysts also expect $1.25.
"Within general merchandise comps, BJ faces a tough [Q4] comparison in consumer electronics, partly offset by easier compares in home and seasonal categories," analysts said.
BofA reiterated a neutral rating on the stock, but increased its price target to $116 per share from $106.
Price: 110.27, Change: -0.13, Percent Change: -0.12
