Summary

  • TD Cowen elevated its price target on off-price retail firms TJX Companies and Ross Stores.
  • TJX has a mean recommendation rating of 1.8 and a consensus mean price target of US$99.95.
  • ROST has a mean recommendation rating of 2 and a consensus mean price target of US$128.9.

Broker TD Cowen increased its price target on two retail firms, namely TJX Companies (NYSE: TJX) and Ross Stores (NASDAQ: ROST). Both these companies are off-price retailers, typically offering goods at discounted or low prices.

The broker picked these stocks for a price target increase as current data suggests that visitation rates to off-price retail have accelerated in August. The new price target represents an upside of 8.1% on TJX’s closing price and 15.7% on ROST’s closing price on Monday.

The broker also believes that off-price retailers are on track to obtain a strong position during the fall/holiday season. It also sees an upside in the guidance for both these retail companies.

As at the last closing price on Tuesday, TJX was up 15.8% and ROST was up 2.06% on a YTD basis.

TJX reported above plan Q2 FY24 comparable store sales growth

During Q2 FY24, TJX reported that its overall comparable store sales increased by 6%, exceeding the company’s plan. This increase was primarily driven by customer traffic at TJX. Meanwhile, the pretax profit margin was 10.4% during the quarter, an increase of 1.2 percentage points over the previous corresponding period.

The diluted EPS also increased 23% year-on-year to US$0.85 in Q2 FY24.

As per EODHD/Others data, TJX has a mean recommendation rating of 1.8 on a scale of one to five. Twenty-four analysts have covered the stock, among which ten believe the stock is a ‘strong buy’, ten believe it is a ‘buy’ and four believe it is a ‘hold’.

TJX Price Chart; Source: EODHD/Others

At the same time, the consensus mean price target on TJX is US$99.95, an upside potential of 8.43% over its closing price on September 12, 2023. TJX closed at US$92.18 on Tuesday, 0.65% higher over Monday’s closing price.

TD Cowen raised its price target on TJX to US$99 and retained an ‘outperform’ assessment on it.

Ross Stores raises second-half sales and earnings outlook for FY23

Ross Stores reported EPS of US$1.32 for the 13 weeks ending July 29, 2023. The net income for the period was US$446 million, as compared to US$385 million of net earnings in the 13 weeks ending July 30, 2022.

Based on this improved performance in Q2 2023, Ross Stores increased its outlook for sales and earnings in the second half of FY23. Comparable store sales are projected to be up 2% to 3% in Q3 FY23. The EPS for the upcoming quarter is expected to be between US$1.16 to US$1.21. 

As per EODHD/Others, ROST has a mean recommendation rating of 2 on a scale of one to five. Sixteen analysts believe that the stock is either ‘strong buy’ or ‘buy’ and five analysts recommend a ‘hold’ rating on ROST. One analyst recommends selling ROST.

ROST Price Chart; Source: REFINTIV

Meanwhile, the consensus mean price target on ROST is US$128.9, an upside potential of 8.87% over Tuesday’s closing price.

ROST closed at US$118.4 on Tuesday, after rising 0.0084% intraday and 2.016% on a YTD basis.

TD Cowen elevated its price target on ROST to US$137 and upped its rating on the stock to ‘overweight’.