Analyst Downgrade Casts Doubt on BJ’s Wholesale Club’s Expansion Plan

Shares of BJ's Wholesale Club faced selling pressure on Wednesday following a significant analyst downgrade. Investment bank Jefferies shifted its rating on the warehouse retailer's stock and slashed its price target, expressing skepticism about the company's strategic growth initiatives.

Jefferies analyst Corey Tarlow moved his recommendation on BJ's Wholesale Club from "Buy" to "Hold" in a client note. In a more substantial revision, the firm reduced its price target for the stock to $90 from $120, representing a 25% cut. This adjustment signals heightened concerns regarding the company's aggressive expansion strategy.

The analysis points to increased execution risks as the company moves into new and highly competitive geographic markets. Specifically, Jefferies highlighted challenges associated with entering regions like the Western United States and the Dallas-Fort Worth area. The research suggests that competing against established players in these territories could pressure future profitability.

Should investors sell immediately? Or is it worth buying BJ's Wholesale Club?

Growth Trajectory Faces Scrutiny

Jefferies has also tempered its long-term sales outlook for the retailer. The firm's projections now anticipate comparable sales growth of approximately 2% through 2028, which falls below the broader market expectation of around 3%. According to this view, the financial benefits from the company's geographical expansion may materialize more slowly than currently anticipated by many investors.

This cautious stance presents a contrast to the company's recent quarterly performance. For the third quarter of 2025, BJ's Wholesale Club reported earnings per share of $1.16, surpassing analyst forecasts. Quarterly revenue reached $5.35 billion.

The upcoming fourth-quarter 2025 results, scheduled for release before the market opens on March 5, 2026, will serve as the next key test for the stock and provide further insight into the company's operational momentum.