Ross Stores shares rise on earnings, upgrade

On Wednesday, Ross reported first-quarter profit rose 19 percent, as consumers hunted for bargains for apparel including dresses and shoes. Ross also raised its 2008 earnings estimate on the strong results.

PiperJaffray analyst Jeffrey P. Klinefelter said Ross is benefiting as consumers remain "strapped." Consumers are cutting back on discretionary spending amid high food and gas prices, tightening credit and a slumping housing market.

Klinefelter praised the company's tight inventory control and merchandise-managing systems and said they could lead to margin expansion.

"We believe traditional department store consumers will look to off-price channels to find trusted national brands at deep discounts temporarily while discretionary budgets remain constrained," Klinefelter wrote.

He upgraded the company to "Buy" from "Neutral" and raised its price target to $40 from $33.

Shares rose $1.34, or 3.9 percent, to $35.46. The stock has traded between $21.23 and $36.94 during the past 52 weeks.

Based in Pleasanton, Calif., Ross operates about 864 Ross Dress for Less stores and 54 dd's Discounts stores.