Target Corporation (NYSE: $TGT) is a leading general merchandise retailer with its HQ in Minneapolis, Minnesota. It operates a chain of discount hypermarkets and stores across the globe.
The Target Corporation is currently the seventh biggest US retailer. It is one of the firms on the S&P 500 Index. Its shares recently soared after the release of better-than-expected quarterly earnings results.
Target Corporation Earnings Report
Target released its fiscal Q3 2023 earnings report on November 15, 2023. The report revealed that Target had surpassed all the analysts’ expectations. The company posted a revenue of $25.40 billion against an expected $25.24 billion, a surprise of 0.62%. Its earnings per share also beat expectations at $2.10, against an expected $1.48, a surprise of 41.91%.
The report revealed that customer spending had broadly pulled back due to higher costs despite the holiday season approaching. Spending in high-frequency categories like beauty and food helped to boost reduced consumer spending.
Target Corporation is Facing Huge Challenges
According to Target CEO Brian Cornell, the company’s primary challenge was reduced consumer spending. Cornell told reporters that customers were looking for lower prices, which meant they were making moves such as postponing purchases.
One important metric that has declined is the comparable sales metric. It is an industry metric that removes the impact of store openings, renovations, and closures. The company’s leadership is currently working to improve traffic and sales back into the green zone.
Another challenge that Target has faced is theft, specifically organized retail crime. Due to the high rate of theft, the company revealed it had shut down nine stores in major cities across the US. Additionally, the company has recently suffered from blowback after LGBTQ+ merchandise sold at its stores went viral on social media. While the store has sold the merchandise for over a decade, the recent debacle online has undoubtedly contributed to slowed-down sales.
While Target reported great numbers in Q3, its revenue is still down 5% compared to the same quarter last year, when it was at $26.52 billion. Additionally, digital sales are down 6% compared to the same period the previous year.
Target (TGT) Stock Performance
TGT stock was up nearly 18% at the close of trading on Wednesday, November 15, 2023. The rise was due to the positive figures in the earnings report. However, Target stock was still down 26% at the close of trading on November 13, 2023, before the earnings report came out. The stock has lost nearly half of its value since the start of the COVID pandemic began in early 2020. As of November 16, 2023, TGT stock is worth $ 130.46.
Price Forecast
In Q4, Target stated that it expected comparable sales numbers to Q3. The company is expecting sales to decline by the mid-single digit, while it expects an EPS in the range of $1.90-$2.60. Based on these figures, the analysts have given TGT stock a Moderate Buy rating.
They believe that the stock is likely to outperform the market in the next 12 months. The analysts have given TGT stock a high price target of $180 and a low of $113 for an average price of $147.82. Based on this average price target, TGT stock has a potential upside of 13.31%.
Should You Buy TGT Stock?
Target Corporation has had a tough time in the past few years. Its stock has lost nearly half of its value in the past three years, and the company’s full-year guidance does not look promising. While the company has a solid plan to grow sales numbers, they concede that it will not happen fast.
When deciding whether to purchase TGT stock, always check the macroeconomic factors that influence consumer spending. When those improve, TGT stock is also likely to rise. In general, the moderate buy rating given to the stock is an accurate reflection of how investors should rate it.
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