11:39 AM EDT, 08/22/2024 (MT Newswires) -- TJX's (TJX) Q2 results signal the possibility that the company's margins have "stepped up" permanently, with room for positive earnings revisions and a flight to quality, Morgan Stanley said in a note emailed Thursday.

The company reported Q2 earnings Wednesday of $0.96 per diluted share, up from $0.85 a year earlier, as net sales rose to $13.47 billion from $12.76 billion. TJX also increased its full-year earnings outlook to $4.09 to $4.13 per diluted share from $4.03 to $4.09 previously.

Morgan Stanley said the quarter's beat was driven by sales and gross margin upside, while higher customer transactions at every TJX division lifted the period's total comparable sales.

According to the investment firm, the increase in the company's full-year earnings outlook "mostly reflects a flow-thru of the Q2 beat."

"We continue to see upside to full-year EPS guidance, and expect this to be primarily concentrated in Q4," Morgan Stanley said. The investment firm noted that TJX's guidance implied a conservative deceleration in Q4 sales and management had already pointed to potential upside to its forecast.

"TJX is an attractive stock to own heading into a tough H2 retail backdrop," Morgan Stanley said, adding TJX remains as one of its top retail overweight calls.

Morgan Stanley reiterated its overweight rating and raised the price target for TJX to $129 from $122.

Price: 120.16, Change: -0.07, Percent Change: -0.06