JP Morgan upgrades BJ’s Wholesale Club (BJ) to Overweight. The bank believes the Costco (COST) clone has the right stuff to thrive during a recession, too:
- BJ’s has made material improvements in its ability to convert free trial customers to paid trial members, which has long-term benefits to the company’s model – including higher traffic and stronger membership fee income.
- We think June sales are strong (at least +12.0%) and with easy compares through year-end, it’s very likely that we’ll see EPS upside from 2Q-4Q.
- Short interest has more than doubled since January (from 8.8% to 20.4%), which will be catalyst in of itself if our thesis is correct.
- Net, while the stock has had a good run in 2008…BJ’s story will continue to have legs, particularly in today’s macro backdrop.
JP Morgan upgrades BJ’s Wholesale Club (BJ) from Neutral to OVERWEIGHT.
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