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On Wednesday, UBS reiterated its Buy rating and $154.00 price target for The TJX Companies (NYSE:TJX) stock, representing 19% upside from the current price of $128.97. With a market capitalization of $144.37 billion, TJX is trading near its 52-week high of $131.30 and appears overvalued according to InvestingPro analysis. The firm’s examination highlighted potential margin pressures for the retailer due to tariffs on Chinese goods. The examination of over 600 products across HomeGoods, TJ Maxx, and Marshall’s stores revealed that a significant 62.9% of items were manufactured in China, with only 3.2% made in the United States.
The study conducted by UBS suggests that the Home category, which is estimated to have accounted for approximately 27% of TJX’s revenue in the calendar year 2024, could see a notable impact on margins from the China tariffs. The swift nature of the tariff announcements, coupled with TJX’s rapid inventory turnover, could affect the company’s current gross profit margin of 30.6%. With annual revenue of $56.36 billion and a strong financial health rating from InvestingPro, investors will be closely watching for any margin pressure in the second quarter. This potential development may come as an unwelcome surprise to investors during the company’s first-quarter earnings call, as many consider TJX to be a defensive stock.
The UBS analysis covered 601 items within 15 subcategories, finding that after China, the most products originated from India and Vietnam, with 13.3% and 8.0% respectively. At least one product came from each of 22 different countries. The research identified Kitchen, Wall Décor, and Lighting as the subcategories with the highest exposure to Chinese manufacturing, where over 75% of the items were sourced from China. Conversely, categories such as Bath and Bedding had roughly 60% exposure, while the Food category had less than 1% exposure to China.
The implications of the tariffs are significant for TJX, as the company may face a near-term challenge in maintaining its profit margins. The detailed findings of UBS’s analysis provide a clearer picture of the extent of TJX’s reliance on Chinese imports across various product categories. Investors anticipating the company’s next earnings report on May 21, 2025, can access comprehensive analysis and 12 additional valuable insights through InvestingPro’s detailed research report. The company’s ability to navigate these headwinds will be closely watched by investors and could influence stock performance in the coming quarters.
In other recent news, The TJX Companies have been the focus of several analyst reports. UBS maintained a Buy rating with a $158 price target, citing TJX’s potential to outperform department store competitors and a projected 11.5% compound annual growth rate in earnings per share over five years. Jefferies also reaffirmed a Buy rating, setting a $150 price target, highlighting TJX’s resilience in managing inventory and its ability to capitalize on excess inventory in the market. TD Cowen echoed the positive sentiment with a Buy rating and a $140 price target, pointing to TJX’s robust structural growth and competitive advantages.
Additionally, UBS identified TJX as one of the most crowded long positions in the retail sector, indicating significant investor interest. This analysis suggests a strong performance momentum for TJX. Meanwhile, TD Cowen adjusted its outlook on Ross Stores (NASDAQ:ROST), lowering the price target to $175 while maintaining a Buy rating, reflecting a more conservative stance amid market conditions. These developments underscore the sustained confidence in TJX’s strategic positioning and growth potential in the off-price retail sector.
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