01:31 PM EDT, 05/15/2024 (MT Newswires) -- BJ's Wholesale Club Holdings (BJ) is likely to see a "tougher" setup in Q1, but is well-positioned for improving results for the rest of the year, UBS said in a note emailed Wednesday.

"BJ's top line was likely impacted by a tough inflationary backdrop & fuel profitability headwinds. Still, we believe the consensus is probably underestimating its membership fee income setup for the full year, and expect the retailer to see improving results through the balance of [2024]," UBS said.

UBS estimates a core comparable sales decline of 0.5% for Q1, compared with the consensus estimate of a 0.2% increase. Bloomberg Second Measure data implies sales growth at BJ's decelerated sequentially to -4.2% year over year, according to the note.

BJ's fuel profitability also likely decreased in Q1 due to macro pressures that have impacted gasoline players. However, the company's fuel margins are "still structurally stronger" compared with the previous years, UBS said.

BJ's is expected to maintain its full-year outlook of a 1% to 2% comparable sales, excluding the impact of gasoline sales, and earnings of $3.75 to $4 per share, according to the note. BJ's is scheduled to release its Q1 financial results on May 23.

The investment firm maintained its buy rating and $89 price target on BJ's.

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