TJX (TJX) Could Hit Margin Ceiling, Thinks Analyst
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Rating Summary:
33 Buy, 8 Hold, 1 Sell
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Wells Fargo maintained a Market Perform rating on The TJX Companies (NYSE: TJX) but reduced its price target to $52-$56 (from $58-$62).
Analyst Paul Lejuez said, "TJX missed its own guidance for the first time since 2008 (in Q4 2013 it missed consensus, but not its guidance), and while the miss was small, with the stock trading at 10x 2014E EBITDA, it didn’t matter. We continue to believe there is a traffic tailwind benefitting the off-price sector, but after years of strong comp and margin gains, we believe TJX will continue to have a tough time exceeding expectations. We are lowering our 2014E/2015E from $3.16/$3.54 to $3.09/$3.48."
"Hitting a merchandise margin ceiling? Merchandise margin (MM) decreased for the second consecutive qtr, though prior to that had increased in every qtr since Q1 2011. The decrease in Q1 was modest – we estimate down ~30bps overall, with Marmaxx MM down only slightly, not bad considering its flat comp. But management has guided MM down slightly for the year (indicated on Q4 call) and this would mark the first annual MM decrease since at least 2006. Seems that there is only one direction merchandise margin can go from here," he added.
For an analyst ratings summary and ratings history on The TJX Companies click here. For more ratings news on The TJX Companies click here.
Shares of The TJX Companies closed at $53.95 yesterday.
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