Veteran trader revisits stock price target for retailer TJX amid dueling tariffs

Yahoo

10-04-2025

Ernie Hermann is always on the lookout for a bargain.
The chief executive of TJX Cos. () explained his position during a February earnings call with analysts, after the parent of T.J. Maxx, Marshall's and HomeGoods beat Wall Street's fiscal-fourth-quarter expectations.
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"We believe that our relentless focus on value every day through a combination of brand, fashion, price and quality will continue to resonate with shoppers," he said.
He noted the company's "very wide demographic."
"We want to sell everyone and believe our offerings across good, better and best brands appeal to shoppers across most income and age demographics," Hermann added.That approach can do wonders for a retailer, especially as President Donald Trump's tariffmania grips the globe and stocks recently got hammered harder than a rodeo clown at Cheyenne Frontier Days.
It's been a tough time for the retail sector. Store closures spiked in 2024, and Coresight Research expects closures to more than double this year, to about 15,000.
U.S. store closures totaled 7,325 last year, the firm said, the most since 2020, when Coresight Research tracked almost 10,000 closures.
Stocks were surging at last check on news that Trump might be open to trade talks with some countries.
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Marc Zabicki, chief investment officer at LPL Financial, said it had been reported that many countries had come forward, willing to negotiate the tariff terms.
'Countries in the eurozone (in aggregate), Asia-Pacific and South America have been some of the most notable,' he said. 'This is a good sign and, again, likely part of the plan as far as the Trump administration is concerned. The U.S. set its tariff marker and compelled affected countries to come to the table. Call it Negotiation 101.'
Zabicki said the outcome was likely to be U.S. tariffs that are far less than those outlined last week and potential concessions from those countries the Donald Trump administration targeted as applying unfair practices.
'The biggest and admittedly significant holdout so far has been China, although that was to be expected,' he added.
That's for sure. China's Commerce Ministry said it 'resolutely" opposed Trump's threat of escalating tariffs and vowed "to fight to the end."
TJX's Hermann reminded analysts during the earnings call that the "direct imports for China for us are an extremely small percentage of our business."
Shares of TJX, which is expected to report earnings next month, are up 27% from a year ago.
On April 3, Citi upgraded TJX to buy from neutral and boosted its price target to $140 from $128.
Tariffs are likely to create "significant disruption" in the market, greatly increasing the availability of product to the off-price retailers at attractive prices, Citi said, according to The Fly.
At the same time, the firm said a potentially weakening consumer environment will mean more consumers are likely to trade down to the off-price channel in search of value.Citi said that it views off-price as "defensively positioned" in the near term but well-positioned for continued growth in the long term as other retailers "struggle and close stores."
The firm expects TJX to benefit from an attractive buying environment.
TheStreet Pro's Stephen Guilfoyle says TJX has a unique advantage among its retail competitors.
The Wall Street veteran, who has a $147 price target on TJX, noted in his recent column that plenty of retailers target the budget-conscious consumer.
These retailers, he said, led largely by Walmart () , Kohl's () , Dollar Tree () and Five Below () , will see business increase if the economy approaches recession as more and more consumers will turn into bargain hunters.
"The difference, for a firm like TJX and a few others, is that many of those other retailers import cheaper goods, much of them from China, in order to keep prices low," he said. "With the recently announced tariffs, these retailers will be forced to choose between diminishing margins and having to raise prices."
The longtime trader, whose career dates back to the floor of the New York Stock Exchange in the 1980s, said TJX's balance sheet "is in significantly better shape than many retailers and what we have come to expect from them."
"Should either the economy slow significantly or the new tariffs stand for longer than anyone hopes — or both — TJX is likely to be a beneficiary of that environmental change in a field that would almost certainly sustain heavy damage," he said.Sign in to access your portfolio