BJ's Wholesale Club's (BJ) investors may be cautious about the year ahead as membership fee income growth is expected to decelerate and concerns remain about core customer health and lower Supplemental Nutrition Assistance Program funding, UBS Securities said.

The brokerage said in a Tuesday note that it expects same-store sales growth of 2% in fiscal Q4, slightly above the consensus of 1.9% and total sales rising 4.6%. The firm attributed the growth to new store productivity and membership fee income.

Every incremental penny to the retailer's fuel margin could contribute about $0.01 to $0.02 to Q4 earnings per share, which UBS estimates at $0.94 versus the $0.93 consensus.

The company's management is expected to offer modestly conservative guidance for 2026 given persistent consumer headwinds and the Dallas/Fort Worth expansion. UBS said BJ's could still benefit from incremental consumer spend tied to higher tax refunds.

The brokerage believes the company is well positioned to take market share in the broader retail sector, particularly as it continues to expand its Fresh 2.0 initiatives. UBS models 2.4% in core same-store sales and $4.63 in EPS for the year, versus consensus of 2.6% and $4.66.

The company is scheduled to report Q4 results on Thursday.

UBS has a buy rating on BJ's Wholesale with a price target of $120.

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