TJX Gets Upgrade at RBC on Strong Balance Sheet

TJX could sustain 21 straight weeks of no revenue thanks to its strong balance sheet, according to RBC.
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Shares of TJX Cos.  (TJX) - Get Report jumped double digits Wednesday after analysts at RBC upgraded the stock to outperform from sector perform thanks to longer-term bullishness on the retailer's market share opportunities.

The firm also raised TJX's price target to $64 a share from $45. The new price target represents a potential 56% upside from the stock's closing price Tuesday of $41.04.

RBC said that while TJX will experience material deceleration due to coronavirus it has plenty of things going for it, including market share opportunities, a strong balance sheet position, diverse regional and category exposure and a strong leadership team. 

"We also expect ample product availability in the wake of Covd-19. TJX has been the biggest share gainer in our space coming out of 2008-09 ... With retail bankruptcies likely to mount in the coming months and further industry consolidation ahead, we expect big to get bigger, with TJX likely to be the biggest share beneficiary globally," said analyst Kate Fitzsimons.

TJX has a balance sheet with $3.2 billion in cash on hand and another $1 billion that it just drew from its credit revolver. This was helped by the company's 26% reduction in capital expenditures in 2019.

RBC's cash burn analysis for the company suggests that TJX could sustain 21 straight weeks of no sales. RBC does admit that it may be early and it wasn't calling a bottom to the coronavirus crisis that has crippled the world economy. 

TJX shares rose 14% to $46.80 in trading on Wednesday.