Analyst: This Retailer Could Compete With Amazon

Ralph Lauren's weak demand and sales trends prompted a downgrade

Managing Editor
Dec 13, 2017 at 10:07 AM
facebook twitter linkedin

With the holidays right around the corner and retail sales due out tomorrow morning, retail stocks are ready to take center stage once again. This morning, retailers TJX Companies Inc (NYSE:TJX) and Ralph Lauren Corp (NYSE:RL) are recipients of distinctly different analyst attention this morning. Below, we will take a closer look at these brokerage notes, and see how the shares of TJX and RL are reacting. 

Analyst Sees Record Highs Ahead For TJX Stock

TJX Companies received a price-target hike to $88 from $80 at Cowen and Company today, and was named its "best idea of 2018." The brokerage firm believes the retailer can compete with Amazon (AMZN) given its "treasure-hunt" shopping experience. The new price target represents a 20% increase from last night's close, and would mark a new all-time high for the retailer.

Out of the gate, the stock is up 0.5% at $73.95. Since falling to an annual low of $66.44 on Nov. 14, TJX is up more than 11% -- holding above its 200-day moving average, which kept a lid on the shares from mid-May through late November.

However, short sellers have recently taken interest in the stock. Short interest on the retailer rose by 9.5% in the last two recent reporting periods. Going by average daily volumes, it would now take these bearish bettors more than three days to cover their positions.

Ralph Lauren Stock Sinks After Downgrade, PT Cut

Ralph Lauren stock is down 4.1% to trade at $96.04, after BofA-Merrill Lynch downgraded the retailer to "underperform" from "neutral," while issuing a price-target cut to $80 from $100. Analysts cited weak demand and sales trend as reasons for the downgrade. The new price-target represents a 20% discount from the equity's current perch, and sits in territory not seen since an early August bear gap.

Despite today's drop, RL stock is still up more than 45% from its May 15 seven-year low near $66. However, most analysts remain skeptical of the shares, with 13 of 16 maintaining a "hold" or "strong sell" rating. Plus, the average 12-month price target of $92.79 sits below the equity's present perch.


Stop leaving money on the table with the same old broken options trading approach...

There is no options strategy that more perfectly capitalizes during earnings season better than this simple call and put buying strategy. Perfect for aggressive traders looking to recover their suffering portfolios so far in 2022. With the simplest possible options strategy, Schaeffer's team with 100+ years of options trading excellence, target 200% gains on every single trade. So many trades are being beaten down by the market, but don't be one of them! Don't waste another second... join us right now before the next trade is released! 

Schaeffer's Daily Bulletin Offer


Special Offers from Schaeffer's Trading Partners