Schaeffer's Trading Floor Blog

Analyst Update: The Gap, Target, and TJX Companies

Analysts adjusted their positions on GPS, TGT, and TJX

by 12/27/2012 12:41 PM
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As a lackluster holiday-shopping season has given many investors reason to fret about the retail sector, analysts have taken the opportunity to weigh in on a few retailers, including The Gap Inc. (NYSE:GPS - 30.42), Target Corporation (NYSE:TGT 58.50), and The TJX Companies (NYSE:TJX - 41.20). Here's a brief roundup of today's brokerage notes:

  • Standpoint Research lifted its view on GPS, upgrading it to "hold" from "sell." Though the stock has endured a pullback from its 12-year peak of $37.85 (tagged on Oct. 5), it has found support in the $30-$31 area over the past few weeks. Despite this recent consolidation, GPS still boasts an impressive 63% year-to-date gain. If the shares can build upon this overall performance, more skeptical analysts could reassess their current positions. The average 12-month price target comes in at $39.24, which signifies a 29% premium to Wednesday's closing price of $30.40. Meanwhile, the retailer tallies 12 "hold" or worse suggestions out of 22 total brokerage recommendations.

  • Ahead of next week's bout of December sales data for U.S. retailers, analysts at MKM Partners have adjusted their same-store sales outlook for several names in the sector. TGT saw its estimate dropped by 1 percentage point to 0%-2%, as MKM cited a surprise dip in November same-store sales and an ineffective partnership with Neiman Marcus. TGT is down some 1.2% on the news, which has cut its 2012 return to about 14%. Should the Minnesota-based company post poor sales results for December, the bullish sentiment surrounding the stock could begin to unravel. The brokerage bunch has doled out 11 "strong buys" and one "buy," versus six "holds" and zero "sells." Any downgrades from this group could spark fresh selling on TGT.

  • MKM also weighed in on TJX, saying it believes the Massachusetts-based business will see a 1%-3% increase in same-store sales, up 1 percentage point from its previous outlook. Considering that last month's same-store sales results were the lowest seen in about a year, TJX could have a hard time convincing analysts to maintain their mostly upbeat stance. Currently, there are 12 "buy" or better endorsements for TJX, compared to nine tepid "holds."

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