Analysts: TJX Companies Facing Easy Q4 Comps

TJX Companies Inc (NYSE: TJX) rosy holiday shopping outlook and easy comparisons with the year-earlier period should result in impressive fourth-quarter gains, an analyst said Wednesday.

"Results from the past two quarters have restored investor confidence" following a period of narrowing margins, Morgan Stanley's Kimbery C. Greenberger said in a note maintaining and Equal-Weight rating and $66 target.

What Greenberger called the company's current peak sales productivity, earnings and profit margins, as well as its valuation relative to future earnings, keeps her lukewarm on the shares.

Easier comparisons with the year-ago period will help T.J. Max to post fourth-quarter same-store sales growth of 4 percent, according to Deutsche Bank's Michael Baker, who reiterated a Buy rating and $68 target.

Severe weather and business snafus hurt results in the year-earlier fourth quarter, Baker said.

TJX on Tuesday posted in-line results but its shares fell for much of the day on a cut to the company's forward earnings guidance.

Half the company's $0.04 cut to its fourth-quarter earnings forecast is from a stronger dollar and half is from investments related to more frequent store deliveries and plans to open in Austria.

"In other words, no real change in the underlying business," Baker said.

Moreover, Baker said current bottlenecks and labor unrest at West Coast ports could actually help the company.

"Nothing better for TJX than a bunch of product unable to get to their destination in time, enabling TJX to buy it a bit late in the season on the cheap," Baker said.

Sterne Agee's Ike Boruchow called the company a "safe haven" for investors in a "volatile retail space," but said the stock's price relative to predicted 2015 earnings make it "not exactly a bargain."

Boruchow maintained a Neutral rating and $60 target.

Moreover, the company's earnings growth of up to 25 percent in each of the past five years is likely to slow, Boruchow said.

Given slowing same-store sales growth, "the growth algorithm has changed," making outsized EPS gains harder to come by," Boruchow said.

TJX traded recently at $62.04, up 0.65 percent.