Keefe Bruyette upgraded MetLife (NYSE: MET) to Outperform from Market Perform as they believe the company's capital and liquidity profile are very solid relative to this week's sell-off.
The firm also upgraded shares of MSCI (NYSE: MXB) to Outperform from Market Perform on valuation as they believe near-term challenges are already priced into shares.
Burlington Northern (NYSE: BNI) was raised to Overweight from Neutral at JP Morgan based on valuation and strong pricing outlook.
Costco (NASDAQ: COST) was upgraded to Buy from Neutral at Goldman.
Pali Capital lifted Virgin Mobile (NYSE: VM) to Neutral from Sell.
Oppenheimer downgraded shares of Trimble Navigation (NASDAQ: TRMB) to Perform from Outperform as they believe the company's Engineering and Construction division is facing a challenging period due to the credit market strain.
Stephens downgraded Seacoast Banking (NASDAQ:SBCF) to Underweight from Equal Weight as they believe a dilutive capital raise is possible given future losses from real estate credits in coastal Florida.
TJX Companies (NYSE: TJX) has been one of the few bright spots in retail of late. As the parent company of TJMaxx and Marshall's. TJX has benefited from bargain-hungry consumers hell-bent on avoiding retail prices.
In a press release issued Tuesday afternoon, TJX announced that it was selling its Bob's Stores chain, which it acquired in December of 2003. In its most recent 10-K, TJX described Bob's as a "value-oriented, branded apparel chain based in the Northeastern United States that offers casual, family apparel. Bob's Stores' target customer demographic spans the moderate-to upper-middle income bracket." The chain consists of 34 stores.
The chain expects to record a charge of $15 million (3 cents per share) on the sale, and expects net cash proceeds of $23 million. The buyers are private equity firms Versa Capital Management and Crystal Capital.
Citigroup analyst Kimberly Greenberger told investors that "TJX's sale of Bob's will help (management) maintain focus on its core off-price business model as Bob's was the only non-off-price division in TJX's portfolio of brands and was not a strategic fit in our view."
Perhaps: but given the lack of investor appetite for retail chains in the current environment, and the state of the credit markets, TJX must have really wanted to get rid of Bob's: now! You just don't see a lot of retailers divesting bad acquisitions to focus on "core strengths" right now.
But given the tremendous performance TJX has shown of late, it's hard to argue with anything its management does.
Shares of TJX Cos. (NYSE: TJX) fell in early trading after the discount retailer reported earnings that failed to impress Wall Street and gave guidance that fell short of expectations. The shares may still be worth adding to your portfolio.
Like Wal-Mart Stores Inc. (NYSE: WMT), TJX is benefiting from cash-strapped consumers eager to snap up the latest bargains. TJX, parent of TJ Maxx, is up 28% this year, outperforming Wal-Mart, which has gained more than 24%. The Massachusetts company currently trades at a forward price-to-earnings ratio of 15, below the Wal-Mart's ratio of 16. Wall Street analysts consider both stocks a buy.
Another thing in TJX's favor were the results in the quarter, which were spectacular. The company's net income tripled to $200.2 million, or 45 cents a share, a penny under Wall Street expectations. Revenue rose 7% to $4.6 billion, and consolidated comparable store sales increased 4% over last year.
The company expects to earn 59 to 62 cents in the third quarter on growth in same-store sales of 2% to 3%. Fourth quarter earnings are expected to be 79 to 81 cents. Analysts had forecast 62 cents and 79 cents for the respective quarters.
"In a very challenging retail environment, we delivered strong sales, merchandise margins and profit increases on top of very strong operating results last year," said Carol Meyerowitz, the company's chief executive officer, in the earninigs release.
Even with the stimulus checks, retail sales numbers for June and July have been nothing to cheer about. And this coming week should provide another look at how things have been shaping up in the apparel and accessories arena. A number of companies are scheduled to release quarterly numbers, from upscale retailer Nordstrom to the parent of discounter TJ Maxx, from hipster Urban Outfitters to global giant Wal-Mart. Here's a look at what Wall Street is anticipating.
Analysts surveyed by Thomson Financial expect the following to report strong earnings growth when compared to the same period of the previous year.
The Street.com's Jim Cramer says people have more money in their wallets again, and that can only be positive.
One-time stimulus? Or multi-time pump break? Last night when I was filling up for $3.67 a gallon -- a month after paying $4.10 at the same pump -- I found myself thinking that I didn't have to go to the ATM after the fill-up. I had something left. I didn't feel that way about the stimulus check, which came and went.
When Wal-Mart (NYSE: WMT) (Cramer's Take) said yesterday the effect of the stimulus check was over, people freaked out and trashed the stock well beyond reason. (I will buy more of it today if I can for Action Alerts PLUS.) But Wal-Mart was reacting to the end of that one-time stimulus.
If oil keeps going as I think it will, we are going to see gasoline well below $3.50 -- we have it at $3.60 now with oil at $110 -- and that part of the tax, a real tax that impacts all Americans, will be gone. The oil decline and, more important, the nat gas decline, still haven't registered in peoples' minds. The idea that it is possible that gasoline might go to, say, $3.00, is in no one's model. That your heating bill could be the same or less doesn't matter to the bears, either.
Russian business runs on different rules. News Corp.'s (NYSE: NWS) Rupert Murdoch, who has been doing business in China for years, is nervous about his Russian enterprises. This morning, the FBI announced it had rounded up a ring of data thieves, many from former Soviet Union countries. And then there's the little matter of BP-TNK, a joint venture between BP (NYSE: BP) and a Russian company, whose Russian shareholders are booting out its Western executives so they can take over the operation.
Here's what Silicon Alley insider reports Murdoch had to say about doing business in Russia: "We have great growing business there but just -- this is purely me, I'm sorry, I'm -- the more I read about investments in Russia, the less I like the feel of it. The more successful we'd be, the more vulnerable we'd be to have it stolen from us, so there we sell now."
In case you missed it, The Detroit Free Press reports that an international ring of data thieves used wardriving -- the practice of stealing data from unprotected Wi-Fi networks -- to take 40 million identities, use the information to print fake ATM cards, and steal millions of dollars. The corporate victims include customers of TJX (NYSE: TJX), Barnes & Noble (NYSE: BKS), and OfficeMax (NYSE: OMX). Five of the 11 defendants are from former Soviet Union countries -- "one is from Estonia, three are from Ukraine, and one is from Belarus."
The Wall Street Journal reports that BJ's Wholesale Club (NYSE: BJ) reported a 26% rise in net income. Its earnings of 29 cents a share beat analysts' expectations by a penny. And as consumers go on their crash recession diet, BJ's is likely to continue to exceed expectations. I would not be surprised if its stock keeps rising.
That's because results are growing faster than had been expected. The Journal reports that BJ's revenue climbed 12% to $2.31 billion. Earlier this month, BJ's said net sales increased 12% to $2.26 billion, as same-store sales rose 9.6%, with gasoline sales contributing 3.9 percentage points to the rise. And BJ's raised its EPS guidance by six cents to $2.04 to $2.14 a share. The mean estimate was $2.06 a share.
BJ's joins two beneficiaries of consumers' recession diet -- Wal-Mart Stores (NYSE: WMT) and TJX Co's (NYSE: TJX) -- caused by the rising price of gasoline coupled with flat income and collapsed housing values. After all, if you can't borrow against your house and your credit cards are maxed out, where are you going to turn to keep your family functioning?
Goldman Sachs cut its view of U.S. department stores to Neutral from Attractive. Specifically, the broker downgraded J.C. Penney (NYSE: JCP) and Nordstrom Inc. (NYSE: JWN) to Neutral from Buy after its commodity team upped 2008 oil price forecasts to $149 a barrel. Still, Goldman upgraded TJX Cos. (NYSE: TJX) to Buy from Neutral and removed Kohl's Corp. (NYSE: KSS) from its conviction-buy list in favor of Wal-Mart Stores Inc. (NYSE: WMT).
By now I'm getting confused with all the deals Apple Inc. (NASDAQ: AAPL) is signing with wireless operators to sell the iPhone in different countries around the world. I believe the past two weeks we heard of at least two deals, including one with a S.Korean company. Today, French wireless operator Orange said it has signed a deal to sell its iPhone in the Middle East, Africa and several European countries. Orange will be the exclusive iPhone provider in Belgium and Romania. It seems that by now Apple's got the world covered.
General Motors Corp. (NYSE: GM) is apparently considering launching its Chevrolet brand in South Korea. In its attempt to stay ahead of fast growing Toyota (NYSE: TM), GM will try to capture a larger share of S.Korea's growing market for imported cars.
The earnings season continues to roll on, and next week's results offer a peek at the state of fashion retailing, as a variety of companies -- from the discount to the upscale, from the hip to the pedestrian -- are scheduled to report earnings.
Analysts surveyed by Thomson Financial expect earnings growth, compared to the same period in the previous year, from Urban Outfitters (NASDAQ: URBN) to be 22.7% to 22 cents per share, from Wal-Mart Stores (NYSE: WMT) to be 9.3% to 75 cents per share, and from TJX Companies (NYSE: TJX) to be 7.5% to 40 cents per share.
Analysts expect earnings declines from the previous year from JC Penney (NYSE: JCP) by 52.9% to 49 cents per share, from Kohl's (NYSE: KSS) by 34.4% to 42 cents per share, and from Nordstrom (NYSE: JWN) by 18.3% to 49 cents per share.
In the case of Abercrombie & Fitch (NYSE: ANF), analysts expect earnings to remain flat, year over year, at 65 cents per share.
And then there's Macy's (NYSE: M), which is expected to swing to a loss of 2 cents per share, compared to a profit of 16 cents a year ago.
The sample size may be too small to define any significant trends, but the numbers do suggest that analysts expect profit declines to be deeper than profit growth, and that consumers may be more likely, given the current state of the economy, to buy clothes at Wal-Mart or TJ Maxx than at Nordstrom or Abercrombie.
The coming results will reveal if those expectations are correct.
TJX Companies (NYSE: TJX) is the largest, family / off-price apparel and home fashion retailer in the United States, boasting seven retail concepts.
Readers of this space know that, given the uncertainties regarding U.S. economic growth, household formation, and job creation, the retail sector is to be avoided. Still, there are exceptions, and with the aforementioned in mind, TJX Companies is worth a review.
In general, analysts expect F2009 revenue to increase 5-7%, including a 3% same store sales increase. The flagship Marmaxx Group (operator of the T.J. Maxx and Marshalls stores) should lead the way, with better brands and increased productivity. A solid performance is also expected from the HomeGoods retail chain.
Further, operating margins are expected to improve, due to increased higher-mark-up sales, diligent control of expenses, and the company's 2500-store buying power advantage. TJX's TJ Maxx and Marshalls stores have become a destination of choice for value-oriented consumers seeking 20-40% price reductions on brand-name apparel. Further, those two chains may benefit in 2008 as certain shoppers, stung by decreased disposable income due to rising energy costs, seek to lower their clothing budget. The Reuters F2009/F2010 EPS consensus estimates for TJX are $2.22/$2.44.
The risks? TJX remains vulnerable to sudden changes in consumer apparel preferences.
The First Call mean rating for TJX is: Buy. [19 firms.] Mean 2008 target: $36. [high: $38, low: $33.]
Stock Analysis: TJX Companies is a moderate-risk stock not suitable for low-risk investors. Investors with an investment horizon longer than 2 years should be rewarded from TJX's shares. Sell / Stop Loss if you were to purchase shares in this company: $23.
Disclosure: Lazzaro has no positions in stocks. In addition to private real estate holdings, he owns corporate and municipal bonds, and cash certificates of deposit.
MOST NOTEWORTHY: Seagate, Nortel Networks and Ann Taylor were today's noteworthy downgrades:
Thomas Weisel downgraded Seagate (NYSE: STX) to Market Weight from Overweight as they believe the company's growth will be more muted given high existing market share and overall industry growth.
Baird downgraded Nortel (NYSE: NT) to Neutral from Outperform citing checks that indicate deteriorating US Enterprise sales in the last few weeks of Q1. The firm now expects companies to guide flat QoQ instead of up and to make cautious 2H08 comments.
Ann Taylor (NYSE: ANN) was cut to Neutral from Buy at Piper to reflect concerns over the LOFT division as well as consumer spending.
OTHER DOWNGRADES:
Citigroup lowered TJX Cos (NYSE: TJX) to Hold from Buy.
WestLB downgraded to Hold from Add Novartis (NYSE: NVS).
Target Corp. (NYSE: TGT) shares are rising this morning after low-end retailer TJX Companies (NYSE: TJX) posted an adjusted fourth-quarter profit of 64 cents a share, above analyst estimates of 63 cents a share. This news coming a day after chief rival Wal-Mart (NYSE: WMT) posted a better-than-expected fourth-quarter profit could mean good news for TGT and retail in general in the coming months. If you think that the company won't fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on TGT.
After hitting a one-year high of $70.75 in July, the stock hit a one-year low of $47.01 in January. TGT opened this morning at $51.91. So far today the stock has hit a low of $51.75 and a high of $53.18. As of 11:20, TGT is trading at $52.91, up $0.69 (1.3%). The chart for TGT looks bullish but deteriorating slightly, while S&P gives the stock a neutral 3 STARS (out of 5) hold rating.
For a bullish hedged play on this stock, I would consider a March bull-put credit spread below the $45 range. A bull-put credit spread is an options position that combines the purchase and sale of put options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make an 8.7% return in just one month as long as TGT is above $45 at March expiration. Target would have to fall by more than 14% before we would start to lose money. Learn more about this type of trade here.
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Analyst upgrades:
Shares of 
Even with the stimulus checks, retail sales numbers for June and July have been 
The Street.com's Jim Cramer says people have more money in their wallets again, and that can only be positive.
Russian business runs on different rules. 
The 
The earnings season continues to roll on, and next week's results offer a peek at the state of fashion retailing, as a variety of companies -- from the discount to the upscale, from the hip to the pedestrian -- are scheduled to report earnings.
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