JPMorgan believes TJX Companies Inc (NYSE: TJX) enjoys quality and consistency. Therefore, the focus should be on translating
them into opportunity. The comments came after an European road-show with the management. The firm did not see any reason to change
its Overweight rating nor its price objective of $85, which still implies over 10 percent upside potential.
Analysts Matthew Boss and Anne Samuel cited the following three key factors as support for their investment thesis:
- A number of growth levers remain, specifically incremental unit growth in Home Goods.
- Procured values are lower by 20–60 percent than Amazon.com, Inc. (NASDAQ: AMZN) or D-Stores.
- Diversified vendor and International buying organization establishes high entry barriers.
In a research note, the brokerage viewed, "Near-term, we are raising our 3Q consolidated comp to +5 percent (> Street at +2.9
percent) with our global field work pointing to TJX as a positive outlier QTD (OffPrice > Dept Stores in 3Q) noting sequential
acceleration in domestic top line trends (Marmaxx + Homegoods) driven by improved merchandise assortments (see pics herein)
partially offset by sequential softness in Europe."
Related Link: This
Chart Shows A Year's Worth Of Comps Across Retail
The analysts pointed out that the company's strength lays in its balance sheet with cash and short-term investments of about
$2.2 billion. The lead analyst thinks that TJX could generate free cash flow of $1.5 billion and pointed out management's
priorities in store expansion, dividend payment and repurchase of shares.
Therefore, the brokerage expects the retailer to make $1.5–$1.6 billion worth of share repurchase per year in the next three
years. In the last two years, the company spent about $1.75 billion average to buy back its shares.
The stock traded up by $1.39, or 1.89 percent, to $75.13 at time of writing.
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Latest Ratings for AMZN
Date |
Firm |
Action |
From |
To |
Oct 2016 |
|
Maintains |
|
Neutral |
Oct 2016 |
|
Maintains |
|
Overweight |
Sep 2016 |
|
Maintains |
|
Market Outperform |
View More Analyst Ratings for
AMZN
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