Downgrading to Neutral on valuation
We are downgrading TJX to Neutral. The stock is up 25% YTD, and has passed our DCF-derived price target of $90. We do not see a reason to be more negative on near-term performance - the US consumer remains in good shape, interest in softlines and apparel continues to be strong, and TJX should have been able to capitalise on new fashion opportunities and consumer strength. With the multiple back to 19x and our DCF valuation matching current levels, the stock is pricing in good momentum and we do not see outsized beats as likely in the short-term.TJX Companies is an off-price apparel and home fashions retailer. The company's segments comprised of: Marmaxx, which sells family apparel (including footwear and accessories), home fashions (including home basics, decorative accessories and giftware) and other merchandise; HomeGoods, which provides a range of home fashions, including home fashions, including furniture, rugs, lighting, soft home, decorative accessories, tabletop and cookware as well as pet, kids and gourmet food departments; TJX Canada, which operates the Winners, HomeSense and Marshalls chains in Canada; and TJX International, which operates the T.K. Maxx and HomeSense chains in Europe and the T.K. Maxx chain in Australia.
Formed in 2003 by an established team from Cazenove, one of the most respected investment banks in the UK, Atlantic Equities conducts and publishes fundamental, bottom up research on mid and large cap US companies.
Atlantic provide order execution through a wide range of DMA products and algorithmic trading suites.
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