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Baird Gives TJX an ‘Outperform’ Rating ahead of Q1 Results

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Baird initiates coverage

On May 14, Baird initiated coverage of TJX Companies (TJX) stock with an “outperform” rating and a price target of $63. Baird believes TJX Companies can sustain EPS growth in the mid-single-digit to high-single-digit range over the long term, backed by a low-single-digit to mid-single-digit rise in same-store sales, higher units, and share buybacks, partially offset by margin pressure due to higher labor and freight costs.

TJX Companies has a “buy” rating from most analysts covering the off-price retailer. As of May 14, TJX Companies was rated a “buy” by 19 (or 73%) out of 26 analysts while six had a “hold” recommendation. One analyst had a “sell” rating for TJX Companies.

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Stock movement ahead of results

TJX Companies is slated to declare its results for the first quarter of fiscal 2020, which ended on May 4, on May 21. Analysts expect the company’s sales to grow 6.0% to $9.2 billion and adjusted EPS of $0.55 in the fiscal first quarter.

TJX companies reported its results for the fourth quarter of fiscal 2019 on February 27. The company beat analysts’ sales expectations and was in line with earnings expectations for the fourth quarter. TJX Companies stock has risen 5.8% since it announced its fourth-quarter results in February. On a year-to-date basis, TJX Companies stock was up 17.5% as of May 14, outperforming rival Ross Stores, which rose 13.5%.

TJX Companies’ off-price model has helped it in delivering consistent results despite challenging retail market conditions and an uncertain macro environment. A strong vendor network and efficient inventory management help TJX Companies offer new merchandise to customers at attractive bargains.

As of May 14, the 12-month average price target for TJX Companies stock was $57.52. This estimate highlights a possible upside of 9%.

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