On Wednesday, CFRA made an adjustment to its outlook on The TJX Companies (NYSE:TJX), increasing the 12-month price target to $92 from the previous $85. The firm maintained its Hold rating on the stock.
The revised target is based on a multiple of 22.4 times CFRA's fiscal year 2025 earnings per share (EPS) projection, which aligns with the retailer's three-year average forward price-to-earnings (P/E) ratio.
CFRA also adjusted its fiscal year 2025 EPS estimate for TJX, raising it by $0.10 to $4.10 and introduced a fiscal year 2026 EPS estimate of $4.35. The company reported a normalized fourth-quarter EPS of $1.12, matching consensus estimates, and revenue of $16.4 billion, which was $222 million above estimates.
In the fourth quarter, sales growth was observed across TJX's brands with Marmaxx up by 12% year-over-year, HomeGoods by 16%, TJX Canada by 13%, and TJX International by 16%. The company's adjusted gross margin for the quarter expanded by 340 basis points year-over-year to 29.5%, attributed to reduced freight costs, decreased inventory shrink, and lower markdowns.
Looking ahead, TJX anticipates a 2%-3% increase in full-year comparable store sales and projects an EPS in the range of $3.94 to $4.02 for the fiscal year. Additionally, the company has outlined plans to repurchase between $2.0 billion and $2.5 billion of its shares in fiscal year 2025.
Despite TJX's position as a leading player in the off-price retail sector, CFRA notes that the company's shares are currently trading at 25 times the fiscal year 2025 EPS guidance, which is above its historical average.
This leads CFRA to suggest that the stock may experience a period of consolidation over the next six months.
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