Is TJX Companies Immune To What Ails Mall Retailers?

While retail stocks rose to new record highs on Tuesday from a surprise earnings beat from Wal-Mart Stores Inc WMT, uncertainty in retail persists after posting poor numbers during the holiday season.

Analysts, however, are still bullish on discount retailers.

Analysts at Wedbush are expecting solid fourth-quarter results from discount retailer TJX Companies Inc TJX ahead of its earnings release Wednesday morning.

“We remain positive on TJX and off-price for 2017; we see a balanced risk/reward into the 4Q EPS print. Our 4Q EPS estimate is well above guidance and assumes a +3.3 percent comp increase,” Wedbush said.

Wedbush does remain conservative on the company’s outlook, however, as it feels TJX will have to show investors +4 percent comp growth in order for the stock to move higher.

Off-Price Versus On-Mall Retailers

“Despite poor numbers from most department stores and specialty retailers during Holiday, the market continues to price in a beat for TJX’s 4Q EPS,” Wedbush analysts said. “We believe the confidence in 4Q fundamentals is well founded, given the ongoing disconnect between trends at off-price versus on-mall retailers.”

Wedbush does not see poor trends at department stores affecting TJX, and the firm is predicting an earnings beat on Wednesday.

The firm maintains an Outperform rating on the stock, with a $85 price target.