11:36 AM EDT, 08/23/2024 (MT Newswires) -- Ross Stores' ( ROST ) is "well positioned heading into a tough" retail H2 amid "margin recapture opportunity" with potential for a further increase in earnings projections in the near term, Morgan Stanley said Friday in a report.

The company on Thursday reported fiscal Q2 earnings of $1.59 per diluted share, up from $1.32 a year earlier, as sales increased to $5.29 billion from $4.93 billion. Both figures topped estimates by analysts.

"The key standout to us was apparel" with additional progress expected, Morgan Stanley said. Benefits of efficiency improvements topped internal expectations, partially offsetting margin pressure, the report said.

Fiscal Q3 period will be "critical" in assessing margin trajectory, Morgan Stanley said.

Ross Stores ( ROST ) expects fiscal Q3 EPS of $1.35 to $1.41 and comparable sales growth of 2% to 3%. The company boosted fiscal 2025 EPS guidance to $6 to $6.13 from $5.79 to $5.98.

Morgan Stanley boosted its price target on Ross Stores ( ROST ) to $178 from $163 and reiterated its overweight rating.

Shares of Ross Stores ( ROST ) rose 1.2% in recent trading Friday.

Price: 154.34, Change: +1.82, Percent Change: +1.19