We're Upping Our TJX Price Target on 'Stellar' Comps, Holiday Tailwinds
Here’s where we would consider revisiting our current rating on the shares.
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Enough gawking at the positive moves in the Pro Portfolio’s individual stock holdings this morning and the aggregate increase in the EPS Diplomats model. We’ve tabulated our trades made just after the market open, and now it’s back to business.
By that we mean sharing our post-earnings call thoughts for TJX Companies (TJX) October-quarter results as we lift our price target to $165 from $150. And coming up after that, we’ll dig deep into Nvidia’s (NVDA) beat-and-raise quarter, and connect a few dots back to some of the Pro Portfolio’s tangential holdings.
TJX’s Earnings Call
Following TJX’s earnings press release and before its earnings call, we discussed the company’s stellar 5% comp sales figure for the October quarter, making it a clear standout. We were reminded of that again this morning following Walmart’s (WMT) adjusted U.S. comp sales figure of 4.5% for the same period. To that, we can add the nice level of margin improvement to 9.5% on the operating line, which was due to a combination of better product mix and lower freight costs. Both are expected to remain favorable tailwinds.
Helping with that product mix was a robust supply of product owing to issues at brand-name retailers, and per management, it is well-positioned for the holiday shopping season. Inventories on a per-store basis were up 8% compared to year-ago levels, which tells us TJX is not only ready for the holiday season, but that its guidance is likely skewed conservatively.
During the earnings call, the TJX management team confirmed our thinking that it would be a beneficiary of lower-income shoppers looking to stretch their dollars — “It was the lower income demographic that was driving the comp in the majority of our geographies.” Given continued inflation pressures, especially on low-to-mid-income shoppers, we continue to see TJX taking spending share this holiday season. What's more, layoff headlines and related concerns are likely to drive others to TJX’s offerings during the holiday and post-holiday season. That and TJX lifting its 2025 EPS expectations give us cover fire to revise our price target higher today.
Longer-Term
When it comes to Costco (COST) and Dutch Bros (BROS) , we frequently refer to their footprint expansion plans. We would be remiss if we did not share that TJX management reiterated its long-term target of ~7,000 storefronts. That is a sizable increase compared to the 5,134 total it had across all its platforms exiting the October quarter.
We continue to see the TJX team as a well-seasoned group with a disciplined eye for merchandise. For now, we’ll keep our Two rating, but if we see TJX shares pull back near the $143 level, our new price target gives us enough upside to reconsider that rating. Let’s remember too, the company telegraphed it will continue to repurchase shares in the current quarter, which means any move back to that level could be short lived. TJX repurchased $1.7 billion in stock, roughly 13.4 million shares, and now targets repurchasing ~$2.5 billion during fiscal 2026, which ends in January 2026.
At the time of publication, TheStreet Pro Portfolio was long TJX, COST and BROS.
