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Target Is The Most Downgraded Stock You Can Buy Now
By: Schaeffer's Investment Research | June 21, 2022
• Target, Taking The Bull By The Horns
TARGET, TAKING THE BULL BY THE HORNS
When Target (NYSE: TGT) warned the market its Q2 earnings could fall short it was dire news for the market. The idea that inventories were bloating, sales were slowing, and a new era of discounting is upon us can only mean one thing; tighter margins. The caveat, however, is that Target also maintained its back-half outlook which suggests a buy-the-dip opportunity is upon us and we think it could be a good one. Not only is there a chance for Target to outperform the now deteriorated outlook but the stock is offering a value and yield we think too good to pass up.
“We thought it was prudent for us to be decisive, act quickly, get out in front of this, address and optimize our inventory in the second quarter — take those actions necessary to remove the excess inventory and set ourselves up to continue to be guest relevant with our assortment,” CEO Brian Cornell said in a televised interview.
Don’t forget, this is Target we’re talking about, one of the leading winners of the pandemic. The company may be experiencing a headwind now but the long-term outlook is still very bullish. The company is expected to grow at a mid-single-digit pace for the next 2-3 years at least, earnings growth should outpace revenue growth, and dividend growth is also in the forecast. Target is a Dividend King with 54 years of consecutive increases to its credit and we are certain it could continue raising the payment for another couple of decades. The payout ratio is a very small 28% of the earnings which leaves plenty of room for increases. Trading at only 16X its earnings, the 3.0% yield it's paying is very attractive.
THE ANALYSTS LOWER THEIR TARGET FOR TARGET, BUT IT’S STILL A BUY
Target has had nothing but negative coverage since the first of the year and a total of 22 price target reductions since the Q1 earnings were released. Fourteen of the price target reductions came in the wake of the profit warning but you need to take this information with a grain of salt. While the price target is falling the analysts still rate the stock a solid buy and see a high-double-digit gain relative to the current price action.
The stock has gotten two downgrades from Buy to Neutral-equivalents over the past 90 days but not enough to budge the consensus rating which has been a firm Buy for at least the last 12 months. The salient point is the current Marketbeat.com consensus is still more than 40% above the price action and we see a floor in the revisions. Target’s warning was a preemptive move that we think is overly cautious and one that has the stock set up for a rebound now.
Looking at the institutional activity, we think the institutions are still on board with Target. The total of activity subsided from Q1 and the net turned bearish but only slightly so which we find telling given the profit warnings. In our view, the institutions are rotating into and out of the name with some trimming and some adding.
THE SELL-OFF IN TARGET IS OVEREXTENDED
The sell-off in Target following the Q1 miss and subsequent profit warning has been sharp but there are several indications the move is overextended and ready for a rebound. Not only is the stock oversold at these levels but the MACD is noticeably divergent from the new low and indicates buying at the current price level. While there is a possibility Target will continue to move lower in the near term, the longer-term outlook suggests a return to the mean if not a full reversal for the stock. In this light, we think Target could move back up to the short-term moving average fairly soon and then move sideways into the Q2 report which is due out in mid-August. By then, we should know if the rebound is just a relief rally or if it’s one that will stick.
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Target (TGT) 125 is next major support area now, Oversold
By: Options Mike | June 20, 2022
• $TGT 125 is next major support area now, Oversold wouldn't chase short, but if it fails at the 8D could be worth a try.
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Target Takes Aim at Amazon Prime Day
By: TheStreet | June 18, 2022
• Target has an answer for Amazon's Prime Day and consumers will be the winners.
Competing against Amazon (AMZN) is not easy for rival retailers as it projects its Prime service to have 152 million users in 2022. The online retail giant's subscriber base is also a key to its success with its annual sales event Prime Day.
Walmart (WMT) made a play to challenge Amazon Prime Day with its Walmart+ subscriber base, which amounted to 32 million subscribers in 2021, as it rolled out Walmart+ Weekend on June 2.
Now, Target (TGT) is the latest major retailer to take on Prime Day, which Amazon launched in 2015. Target seems up for the challenge, as being a one-stop online shopping hub means being able to supply everything to consumers that is under the sun.
Amazon Prime Day Gets Direct Competition
Amazon announced that its annual Amazon Prime Day sale would be July 12-13, so you can imagine shoppers are equally excited to learn that Target released the news that its Target Deal Days would return July 11-13.
Target’s Deal Days are sweeter than that of Amazon’s Prime Day since there is no membership required, already saving consumers Amazon's annual membership fee of $139. Target makes their sale even more accessible to consumers by having their sale for 72 hours versus Amazon’s 48 hours.
Perks to Target Deal Days are the ability to shop online and do pickup or same-day delivery at any of their nearly 2,000 store locations. Consumers do not need to select a pickup window. Currently, Amazon’s same-day delivery is limited to certain products and only in areas supported by same-day delivery.
Target has the upper hand for sure on this one. If you are a Shipt member, you can get same-day delivery from Target for free or you can pay $9.99 for delivery. If you think you will be doing more online shopping in the future, it might be a good decision to go ahead and get the Shipt membership for $99. Shipt is still a $40 savings compared to Amazon Prime Membership. Shipt is a delivery service owned and operated by the Target.
Target Will Pay You to Shop with Them
Consumers spending a minimum of $50 on food and beverages will receive a $10 Target Gift Card when the consumer uses the same-day service option.
Targets Deal Days is set to include some big savings, including up to $70 off Apple (AAPL) products, up to 50% off other technology, up to 50% off select clothing and accessories, up to 50% off toys, up to 40% off kitchen appliances, up to 35% off floor care products, up to 30% off Home Goods and up to 25% on beauty products.
Getting discounts is even easier for Target Circle members using their Target RedCard. Members will receive an additional 5% off all items purchased during Target Deal Days.
While Target hasn’t said specifically what is going to be included in Target Deal Days it is sure to include some discounts for gamers. Deals will also be great for consumers heading off to college with deals on kitchen appliances, home goods, and tech.
Amazon also hasn’t said what all will be included in their July Prime Days, but right now Prime members can access 30 free online games. Consumers are the clear winners when they can shop both sales at the same time, taking advantage of the best deals available by both companies.
While both Amazon Prime Days and Target Deal Days will likely be successful for both corporations, the real winners will be consumers who can take advantage of both sales. As summer activities have started taking control of the family calendar, online shopping and delivery can make summer hours more available to consumers to do the things they want to do.
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Target Co. (TGT) Short Interest Update
By: MarketBeat | June 16, 2022
• Target Co. (NYSE:TGT - Get Rating) was the target of a significant increase in short interest in May. As of May 31st, there was short interest totalling 10,660,000 shares, an increase of 27.4% from the May 15th total of 8,370,000 shares. Based on an average daily trading volume, of 5,730,000 shares, the days-to-cover ratio is presently 1.9 days...
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$TGT Price made another lower low today while RSI signals a divergence for a third time
By: TrendSpider | June 17, 2022
• $TGT Price made another lower low today while RSI signals a divergence for a third time.
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Target (TGT) Flashing strong RSI divergence with a bullish engulfing daily candle today
By: TrendSpider | June 15, 2022
• $TGT Flashing strong RSI divergence with a bullish engulfing daily candle today.
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Bear of the Day: Target Corporation (TGT)
By: Zacks Investment Research | June 13, 2022
Wall Street dumped Target (TGT) after its first quarter FY22 financial release on fears of mounting costs and inventory issues. The retail titan lowered its guidance when it released its quarterly results on May 18.
Target stock tumbled 25% following its report, for its worst one-day showing since Black Monday in 1987. Target then on June 7 slashed its outlook again, citing inventory imbalances and more.
Not Pandemic Shoppers Anymore
Target and its peers such as Walmart were huge beneficiaries of the initial covid lockdowns and the post-pandemic boom that saw Americans go on shopping sprees for items such as furniture and TVs.
TGT remains a retail powerhouse and will for years to come. The retailer’s expanded e-commerce offerings and same-day services will help it thrive in the have-it-your-way style shopping environment that’s here to stay.
Along with its new-age shopping push, the Minneapolis-based retailer has focused even more heavily on its own in-house brands for fashion, furniture, food, and more. Target’s various store brands succeed because of its ability to adapt and stay on-trend, while remaining affordable.
Target’s near-term outlook, however, has been slashed almost overnight on the back of rising costs and a mismatch between its current inventory and what shoppers want, having returned to their normal lives.
Image Source: Zacks Investment Research
Investors initially hammered Target after its first quarter release for its executive team’s inability to navigate rising freight costs and more. Alongside its bottom-line miss, Wall Street didn’t appreciate Target’s decision to absorb higher costs instead of passing them on to consumers. Walmart (WMT) got hit hard for a similar report.
Along with the hit to margins, Target is dealing with inventory issues and is currently stuck holding onto too much furniture, appliances, and more. Target on June 7 announced that it would take “actions to right-size its inventory for the balance of the year and create additional flexibility to focus on serving guests in a rapidly changing environment.”
The Minneapolis retailer is set to make additional markdowns, as well as remove excess inventory, and cancel orders. In addition, TGT will add “incremental holding capacity near U.S. ports to add flexibility and speed in the portions of the supply chain most affected by external volatility.”
Target is also experiencing other near-term setbacks that it plans to address, including “working with suppliers to shorten distances and lead times in the supply chain.”
The nearby chart shows how far Target’s adjusted earnings outlook has fallen since its Q1 release and since the company provided its updated guidance last week. Overall, its FY22 Zacks consensus estimate has dropped 37% and 20% for 2023.
Image Source: Zacks Investment Research
Bottom Line
Target’s downward earnings revisions help it land a Zacks Rank #5 (Strong Sell) right now. The stock has tumbled around 45% from its November records and 35% in 2022, with it now trading around where it was in August 2020.
TGT is Monday’s Bear of the Day given its near-term outlook and the continued unknowns ahead on the consumer spending and inflation fronts. But Target remains a strong company and the retailer flexed its financial strength on June 9 when it raised its dividend by 20% even as it undergoes its campaign to recalibrate its inventory.
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TGT Classic example of a weak name with constant failures at the 8D..
By: Options Mike | June 12, 2022
• $TGT Classic example of a weak name with constant failures at the 8D.. new 52W low coming?
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Q2 2023 EPS Estimates for Target Co. Cut by DA Davidson
By: MarketBeat | June 10, 2022
• Target Co. (NYSE:TGT - Get Rating) - Equities researchers at DA Davidson lowered their Q2 2023 earnings per share estimates for Target in a research report issued on Wednesday, June 8th. DA Davidson analyst M. Baker now anticipates that the retailer will earn $0.71 per share for the quarter, down from their previous forecast of $2.18. DA Davidson has a "Buy" rating and a $171.00 price objective on the stock. DA Davidson also issued estimates for Target's FY2023 earnings at $8.68 EPS and FY2024 earnings at $11.38 EPS. Target (NYSE:TGT - Get Rating) last issued its earnings results on Wednesday, May 18th. The retailer reported $2.19 earnings per share for the quarter, missing the consensus estimate of $3.07 by ($0.88). Target had a return on equity of 44.75% and a net margin of 5.48%. The company had revenue of $24.83 billion for the quarter, compared to analyst estimates of $24.48 billion. During the same quarter in the previous year, the company posted $3.69 earnings per share. The company's quarterly revenue was up 4.0% compared to the same quarter last year...
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Target Corp. (TGT) PT Lowered to $185.00
By: MarketBeat | June 8, 2022
• Target (NYSE:TGT - Get Rating) had its price objective cut by investment analysts at Telsey Advisory Group from $200.00 to $185.00 in a research report issued on Wednesday, Stock Target Advisor reports. The firm presently has an "outperform" rating on the retailer's stock. Telsey Advisory Group's price objective indicates a potential upside of 17.73% from the stock's previous close...
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Target Needs to Fire CEO Brian Cornell
By: 24/7 Wall St. | June 10, 2022
Target is among the worst dumpster fires in the retail industry over the past several years. Its board decided to raise the company’s dividend, which hardly offsets the mistakes made by Chair and CEO Brian C. Cornell. He has nearly ruined Target, and it will take a very long time for it to recover.
A recent Wall Street Journal article analyzed inventory to sales at America’s largest retailers. Target’s figures were particularly horrible.
Target’s stumbles managed to produce earnings that drove the stock down 25% when they were announced. This was described as the stock’s worst day since Black Money in 1987. Whether it was hyperbole or not, Target’s stock is down 33% in the past month. The S&P is up 3% over the same period. Shares of rival Walmart, which also posted poor earnings, have dropped 20% in the same period.
Inventory management is Retail 101. That Target missed the mark so badly is truly extraordinary. To burn off the excess inventory, it will need to drop prices on many items. The trouble will last for months.
Cornell has held his job since August 2014. If anyone should have a sense of inventory management, he should. Instead, he destroyed almost $30 billion of the retailer’s market value.
Boards have the job of protecting shareholder interests. Target’s board has several members with retail experience. They must know how poorly Cornell has run the company recently and that he needs to be replaced by someone who can do much better.
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Target Stock: After 32% Plunge, Should It Still Be Part Of Your Income Portfolio?
By: Investing.com | June 9, 2022
• Target is the worst performer among big-box retailers this year
• The rapidly worsening outlook underscores Target's struggle to adjust to unexpected shifts in demand amid soaring inflation
• Despite short-term inventory challenges, Target continues to remain a solid dividend pick for income investors
After producing remarkable gains during the pandemic, one of the US's largest retailers, Target (NYSE:TGT), has been experiencing a sudden and steep reversal in its fortunes. Shares of the Minneapolis, Minnesota-based discount department store are down 32% this year, the worst performance among big-box retailers.
The stock closed Wednesday at $156.70, hovering around its lowest level since Nov. 2021.
TGT Weekly Chart
The bearish spell comes after the retail giant reported worse-than-expect first-quarter earnings last month and warned investors about even more significant margin cuts in the months ahead. Markets saw the news as a warning of broad US recession risks, triggering the stock's biggest one-day plunge since 1987.
During the pandemic, Target and other retailers benefited from rising sales of higher-margin goods such as kitchen appliances, television sets, and furniture. This trend helped push TGT shares to a 180% bull run since the March 2020 crash.
But as consumers shifted buying patterns due to relentless inflation, the retailer has been experiencing lower-than-expected sales. As a result, inventories have been piling up, augmenting costs and further slashing margins.
Recently, Target announced yet another cut on its profit outlook—the second in three weeks—blaming soaring merchandise stockpiles and "unusually high transportation and fuel costs." According to the new guidance, Target will now make a 2% operating profit from sales this quarter. On May 18, the company had projected the metric would be around 5.3%.
Bank of America yesterday downgraded Target shares to neutral from buy, citing the retailer's significant level of discretionary inventories, which does not justify its current high valuation. The firm also slashed its price target on the stock to $165 from $235.
Target has a higher relative exposure to discretionary categories than other big-box-retail peers. General merchandise comprised more than half of Target sales in 2021, while it made up about 32% of Walmart's (NYSE:WMT) US sales, Bank of America noted.
Long-Term Outlook
However, in a recent interview with CNBC, Target's Chief Executive Officer Brian Cornell reiterated his confidence in earning operating margins of 8% in the long run—even as the retailer abandoned that goal for this year. He also said to expect revenue growth in the low to mid-single digits for the full year and to maintain or gain market share in 2022.
Furthermore, Target has been using its stores more as mini distribution centers for its booming digital business to fulfill online orders.
That move comes from CEO Cornell's efforts to make its retail outlets more attractive. He spearheaded the remodeling of hundreds of stores, introduced many affordable fashion brands, and bolstered the retailer's e-commerce offerings.
There is no doubt that Target has suddenly found itself in a different operating environment than it experienced during the pandemic. But this short-term challenge doesn't mean the retailer has lost its appeal to income investors.
Income Appeal
When picking dividend-paying stocks, the biggest concern to address is whether the company can produce strong cash flows in both good and bad times. Target has an excellent track record on this front.
The company has steadily increased its dividend every year for the last 50 years, a period that covers crises such as the dot-com collapse of the early 2000s, the financial crash of 2008-2009, and the COVID-19 pandemic. While delivering cash to investors each quarter, the discount store has also maintained a very conservative payout ratio of about 30%, showing more cash-distribution runway.
In June last year, Target announced a whopping 32% hike in its payout, scaling its dividend to $0.9 a share quarterly with an annual yield of 2.3%
Bottom Line
Despite its short-term challenges, Target continues to remain one of the best retail stocks to own due to its solid income potential and its ability to rebound quickly. The current weakness provides an attractive entry point to long-term investors.
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Target Stock Gains After Retailer Boosts Dividend Despite Margin Concerns
By: TheStreet | June 9, 2022
• Just days after trimming its near-term margin forecast, Target said it will boost its quarterly dividend by 20%.
Target (TGT) - Get Target Corporation Report shares moved higher Thursday after the retailer boosted its quarterly dividend just days after warning that excess inventories and higher input prices would pressure near-term profit margins.
Target said it would pay a quarterly dividend of $1.08 per share, a 20% increase from its previous payout, to shareholders of record on August 17. The payment will be made on September 10, Target said.
Earlier this week, Target cautioned that its bigger-than-expected 35% build-up in overall inventories would likely trigger price cuts, adding Tuesday that deeper discounts would be needed to shift the excess goods, adding that operating margins would narrow to around 2% over the current quarter before rebounding into the second half of the year.
Target stock, in fact, fell the most in more than three decades last month after it cautioned on freight and fuel costs and their impact on near-term margins, noting the combined increase would amount to around $1 billion.
CEO Brian Cornell said that while the retailer's efforts to arrest inflation increases and find efficiencies in its ordering and transport systems would "result in additional costs in the second quarter", he was confident that this "rapid response will pay off for our business and our shareholders over time, resulting in improved profitability in the second half of the year and beyond."
Target shares were marked 0.9% higher in pre-market trading immediately following the dividend boost to indicate an opening bell price of $158.10 each, a move that would still leave the stock with a year-to-date decline of around 33%.
The S&P 500 Retailing Group is down around 24% so far this quarter, its worst performance since 1990, as investors expect more pain to come from both the Federal Reserve's rate-based inflation fight and the highest nominal domestic gas prices on record, which continue to pinch household budgets and discretionary spending.
Citigroup analyst Paul Lejuez noted that average U.S. retail inventories are outpacing sales gains by around 10 percentage points, the widest gap since the pandemic, as retailers struggle to manage both supply chain disruptions, fuel and freight costs, and rapidly shifting consumer habits.
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Target to return soon to strong profits after tackling inventory woes - analysts
By: Reuters | June 7, 2022
Target Corp (NYSE:TGT) is expected to shed by August the excess inventory that is hurting its profitability and be poised to show strong profits during the key back-to-school and holiday sales seasons, analysts said on Tuesday.
The retailer said it will work quickly to cull its unsold stock, which analysts believe is largely discretionary items like TVs and appliances that consumers have avoided as inflation spiked in recent months.
"Target is doing the right thing in acting aggressively to clear out excess inventory by taking the margin hit now. This will allow them to be better positioned ahead of the two most important retail selling seasons, back-to-school and holiday," said Ken Perkins, founder of research firm Retail Metrics.
"This should be a short-term problem."
The company on Tuesday cut its second-quarter operating profit margin forecast by more than half, to 2% from 5.3%, but expects to hit 6% in the second half of the year.
The inventory surge, up 43% in dollar value year over year at the end of the first quarter, hurt profitability.
But Target CEO Brian Cornell said the retailer was working to shed surplus stock by the end of the second quarter on July 31 and will cancel some orders, leading to "additional costs in the second quarter."
CFRA analyst Arun Sundaram said he believes the company will clear out its excess inventory in that time.
Going forward, the retailer will dedicate more shelf space to essentials like food and beauty items, where consumer spending is rising.
Target maintained its sales forecast for the year, and visits to Target stores have been rising since the start of the year, with the highest gains seen in April.
Even as inflation soared, traffic rose 10% that month compared to last year or 14.3% compared to pre-pandemic levels. In May, the trend slowed but traffic was still much higher than last year.
The strength in foot traffic helped Target shares pare losses on Tuesday, and they ended the day down 2.4%.
In the past month, full-year profit warnings from major U.S. retailers including Walmart (NYSE:WMT) and Target have stoked fears of recession.
Analysts, however, say the companies are well positioned, as their broad range of products - from eggs to kitchen appliances - and low prices attract shoppers.
"Target’s visit metrics have remained strong even amid significant economic headwinds, a testament to the company’s powerful draw, wide product offering and focus on value for its key audience," said Ethan Chernofksy, vice president of marketing at Placer.ai.
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Target Resting on the 200 week SMA roughly 2% above support
By: TrendSpider | June 7, 2022
• $TGT Resting on the 200 week SMA roughly 2% above support.
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Target (TGT) Cuts Guidance. Dump the Stock? Check the Chart First.
By: TheStreet | June 7, 2022
• Target stock came into Tuesday under pressure after a bearish update.
Target (TGT) stock opened more than 7% lower on June 7 after the retail giant warned about its profitability.
Just a few weeks ago, Target stunned Wall Street with its quarterly update as inflation and inventory issues cut into its guidance.
Walmart (WMT) spoke in a similar tone the day before.
In the latest update, Target said its second-quarter operating margin would likely come in closer to 2% rather than the 5.3% it guided to last month. Further, the retailer is offering deeper discounts on some of its products to reduce inventory.
Interestingly, Costco Wholesale (COST) is raising prices while Target is now cutting them.
Another interesting note? Investors are buying the dip. A few weeks ago, Target and Walmart’s update sent a one-two punch rippling through the market.
Now, though, we’re seeing the opposite effect. Target stock is down just 1% on the day, while the S&P 500 and Nasdaq — which were down 1% and 1.4% in early trading, respectively — are now both in positive territory.
Are investors changing their tune?
Trading Target Stock
Daily chart of Target stock.
Chart courtesy of TrendSpider.com
A glance at Target’s stock reveals one very key area: $145 to $150. The importance is a culmination of several observations.
First, the stock hammered out its initial post-earnings low in this zone. It’s now retesting this area today, but we’re getting a robust buy-the-dip reaction from the bulls.
Second, we have the 200-week moving average in this zone. It adds to the significance and legitimacy of this area. Lastly, there’s bullish divergence on the RSI reading (as noted at the bottom of the chart).
Put it all together and Target stock has a pretty impressive support zone.
But -- that does not mean the stock is out of the woods.
We’ve almost completely filled today’s gap, but other hurdles exist. For starters, Target stock has not reclaimed the declining 10-day moving average. For now, that’s likely to be active resistance.
Additionally, the stock has put in a higher low and lower high. This wedge pattern is a consolidation phase and we still face the risk that it consolidates and breaks lower.
That changes if Target stock can break out over wedge resistance (blue line) and clear the post-earnings high at $168. Above $168 and the stock can begin filling this giant gap, which goes all the way up to $209.
Of course, to completely fill the gap it will have to push through the declining 21-day and 50-day moving averages as well.
Obviously the bulls do not have an easy ride from here.
It’s immensely positive, however, to see a bullish reaction to a bearish news item. The stock still faces headwinds, but if it can clear them, it could set up Target stock for an extended rally.
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Costco Raises Prices While Target Lowers Them
By: TheStreet | June 7, 2022
• Costco and Target face different problems. Here's how it affects shoppers.
The pandemic has disrupted a variety of retail chains. Covid has created supply-chain problems, where ordered items take longer to arrive, but that's not the only problem facing retailers, including Target (TGT) and Costco (COST).
In addition to deliveries becoming unpredictable, forecasting demand is much more challenging. Normally, retailers can use past years' sales to predict next year's demand. During the current period, demand has become fluid and customer patterns have changed more than a few times.
When lockdowns first started, for example, toilet paper, paper towels, and a number of other items were in short supply. That occurred because when people stopped going to work, they consumed more of those items at home. And since office toilet paper and paper towels aren't the same as the ones we use at home, stores sold out.
That problem took weeks to fix because supply chains had to be adjusted. Manufacturers literally had to shift production into making more of the products we use in our homes.
As the pandemic has dragged on, this scenario has repeated multiple times across a variety of areas. That led to Target ending up with too much of some items, which will cause it to lower its prices to sell off some of the excess.
Costco, which has a much more basic product selection, has managed to mostly avoid the excess-inventory problem that has plagued its rival. But increased costs, particularly for fuel and labor, have forced it to pass on some of those increases to customers.
Target Has Too Much Inventory
When you need toilet paper or cat food, it's not in any way relevant that your local retail chain has a warehouse full of televisions.
The problem is that a few months ago, when people were still being careful, demand for televisions was high. A store chain can't restock TVs quickly, so Target ordered new supply in that area -- which was no longer in high demand when it arrived.
That scenario repeated across a variety of product areas, leaving the retail giant with lots of inventory, just not the items customers want right now. This ties up cash, so the company has decided to lower prices to get rid of some of the excess. It explained those moves in a news release:
"The company is planning several actions in the second quarter, including additional markdowns, removing excess inventory and canceling orders."
Chief Executive Brian Cornell made clear that the company sees these issues as a logistics problem, not a sign that it has any long-term problems with its customer base.
"Target's business continues to generate healthy increases in traffic and sales, despite sustained volatility in the macro environment, including shifting consumer-buying patterns and rapidly changing operating conditions," he said.
Selling off these items will hurt Target's short-term profitability, but they could also increase same-store sales. The company does not have a traffic problem -- customer counts have been up -- so lower prices might drive sales in areas that have slowed due to shifting market conditions (you might not be looking for a TV, but at the right price you might buy one).
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Target Falls After Cutting Guidance
By: Vladimir Zernov | June 7, 2022
• The company will have a challenging second quarter.
Target Cuts Guidance Again
Shares of Target found themselves under pressure after the company cut its guidance just a few weeks after the release of a disappointing earnings report.
Target announced that it planned to “right-size its inventory for the balance of the year and create additional flexibility to focus on serving guests in a rapidly changing environment.”
As a result, Target expects that its second-quarter operating margin rate will be in a range around 2%. Previously, Target expected that its operating marging rate would be in a wide range centered around 5.3%. In the second half of the year, operating margin rate is expected to grow to 6%.
Put simply, Target’s second-quarter results will look bleak. In addition, the market is worried that the economic situation is worse than previously expected due to inflation.
What’s Next For Target Stock?
Analyst estimates have moved lower after the disappointing first-quarter report. Target is expected to report earnings of $10.6 per share in the current fiscal year and $13.3 per share in the next fiscal year, so the stock is trading at 11 forward P/E.
While current valuation levels are not expensive, traders should keep in mind that analyst estimates will continue to move lower after another gudiance cut.
More, recent news from various firms, including Tesla, signal that the economy may face problems in the second half of this year. In this light, it remains to be seen whether the market will believe that Target’s problems will be limited to the second quarter and that the company would get back to planned operating margin levels in the second half of the year.
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Target Corp. $TGT Still in the penalty box and struggling to break the 8D.. weak
By: Options Mike | June 5, 2022
• $TGT Still in the penalty box and struggling to break the 8D.. weak.
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Target: A Dividend King On Sale
By: Seeking Alpha | May 29, 2022
Summary
• Analysts expect by 2025 TGT could deliver 63% total returns or 20% annually.
• Target is the 31st highest quality company on the DK master List (94th percentile).
• Analysts expect Target stock's PE to recover to nearly 17X in the next year, delivering 35% of total returns.
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Target (TGT) Downgraded by StockNews.com to "Hold"
By: MarketBeat | May 28, 2022
• Target (NYSE:TGT - Get Rating) was downgraded by StockNews.com from a "buy" rating to a "hold" rating in a research note issued on Saturday.
Other research analysts have also recently issued research reports about the stock. Raymond James cut their price target on shares of Target from $275.00 to $205.00 and set a "strong-buy" rating for the company in a research note on Thursday, May 19th...
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Target Back to the gap.. on watch to see if has any power to push through some of it now
By: Options Mike | May 30, 2022
• $TGT Back to the gap.. on watch to see if has any power to push through some of it now.
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Largely bullish flow on $TGT going into close on friday
By: K1Calls | May 31, 2022
• Largely bullish flow on $TGT going into close on friday, will be interested to see if it can get a push after testing this giant gap it left on their poor earnings.
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Target (TGT) Price Target Cut to $225.00 by Analysts at UBS Group
By: MarketBeat | May 19, 2022
• Target (NYSE:TGT - Get Rating) had its price objective reduced by research analysts at UBS Group to $225.00 in a note issued to investors on Thursday, Stock Target Advisor reports. The firm currently has a "hold" rating on the retailer's stock. UBS Group's price objective indicates a potential upside of 47.84% from the stock's previous close...
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Buy Target Stock (and Ignore the Short-Term Reaction). Here's Why.
By: TheStreet | May 19, 2022
• Target shares dropped 25% after an earnings report that many did not like. (That creates a potential buying opportunity.)
Earnings reports tell you a lot about a company when you follow them quarter after quarter. Does the company deliver on its promises? Can it address problems? Are its CEO's comments accurate and does he or she own up to mistakes or explain when things go wrong.
Taken on an isolated basis, however, earnings reports don't paint a full picture. That can lead to the market -- a sort of amorphous collective whole that describes analysts, pundits, traders, and people who like being on TV -- to take certain numbers and use them to push a stock's shares up or down.
Financial media like to tell you if a company beat analyst estimates on revenue and profits, but they're not that good at letting you know the why. That's what happened to Target (TGT) when it reported first-quarter earnings. Analysts and more broadly "Wall Street" decided the numbers were bad without really looking at the long term or the company's actual health.
It's sort of like hearing someone sneeze, assuming they have covid, and not noticing that something tickled their nose. Target reported slower same-store sales growth and saw its earnings per share drop by almost 50%.
The market or Wall Street, whatever you want to call it, saw those as bad numbers, and the shares closed on May 18 down over 25%. In reality, Target showed how strong a business it has and why you should consider owning shares.
How Did Target Actually Do In Q1?
When a potential NFL player runs a 40-yard dash, the people evaluating the performance note the wind conditions. Running into the wind slows you down and running with the wind at your back makes you faster.
Target just completed a quarter running into a really stiff wind. It's a time of unprecedented supply chain problems, near-historical high gas prices, very high, if not record, inflation, and the lingering impact of the pandemic. The company also had to deal with a year-ago quarter where covid put the wind at its back, pushing it to 22.9% same-store sales growth.
Despite all of these negative conditions, Target delivered a 3.3% increase in comparable-store sales and an EPS of $2.16 (down from $4.17 in Q1 2021). Basically, the company managed to grow its sales and still make money despite market conditions that drove its costs higher.
Labor costs increased and shipping costs increased, but rising consumer prices on housing, gas, and other items limited how much of the cost increase Target could pass on to its customers.
Target CEO Offers Context
"Our first-quarter results mark 's 20th-consecutive quarter of sales growth, with comp sales growing more than 3 percent on top of a 23 percent increase one year ago," said CEO Brian Cornell.
"...Throughout the quarter, we faced unexpectedly high costs, driven by a number of factors, resulting in profitability that came in well below our expectations, and well below where we expect to operate over time. Despite these near-term challenges, our team remains passionately dedicated to our guests and serving their needs, giving us continued confidence in our long-term financial algorithm, which anticipates mid-single-digit revenue growth, and an operating margin rate of 8% or higher over time."
Target's numbers showed its strength and its ability to weather unprecedented market conditions. The people who drove its share price down opted to focus on a clearly explainable short-term downturn in profitability.
Long-term investors don't think that way. Instead, they ask the question "do these results show me that this company is positioned to be a retail winner for years to come?"
The answer to that is emphatically yes. You don't trade Steph Curry when he misses a shot in the first quarter. Cornell isn't managing to win the quarter. He's running Target to win for decades and he's positioned his company to do exactly that.
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Trading Target Stock After Earnings Plunge and Bear Market Hits Retail
By: TheStreet | May 18, 2022
• Target is getting swamped, as is most of retail. Here's the must-hold support area for the Minneapolis retail giant.
My, have times changed, and quickly. Target (TGT) is just the latest example, down about 28% on Wednesday. Walmart (WMT) felt something similar with its 11.8% decline on Tuesday, its largest one-day decline in 35 years.
Both management teams cited painful inflation pressures cutting into profit.
Target’s revenue rose 4% year over year but still missed analysts’ estimates. Earnings of $2.16 a share missed estimates and were a bit more than half the year-earlier figure as inflation ate into the bottom line.
It’s no wonder the stock is getting hammered in today’s session. That in turn has thrown the charts for a serious loop.
But still -- there's some potential support to keep an eye on.
Trading Target Stock
Weekly chart of Target stock.
Chart courtesy of TrendSpider.com
On the weekly chart, the action here is discouraging. After all, Target is one of the premier retailers, along with Walmart, Costco (COST), Home Depot (HD), Inc. Report and others.
Unfortunately, this group has sunk into a bear market, much like what tech and other sectors have felt.
But Target stock particularly is dipping into an interesting area. The shares are testing the monthly VWAP measure and the 61.8% retracement of the range, which is measured from the all-time high down to the March 2020 covid low.
If we could get a bounce going over $168 — today’s high — then it’s possible we see a larger bounce up to $184. That level was the prior 2022 low before today’s action.
On the downside, it would be good if bulls could hold today’s low and the current support areas. But let’s not pretend that this is a good-looking chart.
If support were to fail, it would open the door down to the 200-week moving average near $150.
Noteworthy is that this measure hasn’t been tested in quite some time — even during the covid pullback. You’d have to go back another year from that date, to March 2019, to see the most recent test of this measure.
Below that level and the $125 to $130 area could be on the table.
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Target earnings disappointment weighing on a lot of other names
By: unusualwhales.com | May 18, 2022
• $TGT earnings disappointment weighing on a lot of other names.
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Put Traders Blast Plummeting Target (TGT) Stock
By: Schaeffer's Investment Research | May 18, 2022
• The TGT May 150 put is quite popular today
• The retail giant announced that profits were halved this quarter
Just like sector peer Walmart (WMT), retail stock Target Corp (NYSE:TGT) is taking a nosedive this morning, down 24.1% to trade at $163.45 at last check, after the company's first-quarter report. The results themselves were mixed, with earnings of $2.19 missing estimates of $3.07, while revenue of $25.17 billion beat the anticipated $24.49 billion. However, the retailer announced that profits were cut in half this quarter amid high costs and supply chain issues. CEO Brian Cornell stated "we were less profitable than we expected to be or intend to be over time."
Target stock was already on its way lower ahead of the earnings event. Now, TGT is trading at its lowest levels since November 2020, and headed for its worst day ever on record. Year-to-date, the shares were contending with their breakeven level prior to today's collapse.
Options bears are sharp-sighted this morning, with 133,000 puts exchanged so far -- 46 times the intraday average -- compared to 55,000 calls. The May 150 put is the most popular by far, followed by the 160 put in the same monthly series, with new positions being opened at both. It's also worth noting that TGT has landed on the short sale restricted (SSR) list today amid the volatile price action.
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Target profit halves as rising costs hit margins, shares slide 24%
By: Reuters | May 18, 2022
• Target Corp’s first-quarter profit halved and it warned of a bigger margin hit on Wednesday due to rising fuel and freight costs, in a clear sign that deep-pocketed U.S. retailers are no longer immune to surging inflation.
Target Corp’s quarterly profit halved and it warned of a bigger margin hit on Wednesday due to rising fuel and freight costs, in a clear sign there would be no immediate relief for U.S. retailers from surging inflation.
Shares tumbled 24% following the bleak results that came a day after larger rival Walmart Inc cut its annual profit view and its shares logged their worst day since 1987, though both retailers clocked better-than-expected quarterly sales.
“We were less profitable than we expected to be or intend to be over time,” Target Chief Executive Brian Cornell said.
“These (costs) continue to grow almost on a daily basis and there is no sign right now…that it is going to abate over time.”
Rising fuel and freight expenses will add nearly $1 billion more than originally expected in annual expenses, Target said, as pandemic disruptions to shipping channels and the crisis in Ukraine keep costs for companies elevated.
Target’s quarterly gross margin dipped to 25.7% from 30%, also due to excess inventory resulting in higher discounts. Demand for costlier items such as televisions and kitchen appliances was also waning, the company said.
“Target’s print looks remarkably similar to Walmart’s … But this is accompanied by much worse margins due to the now all too common refrain of higher supply-chain costs, which are not yet being fully passed through to consumers,” D.A. Davidson analyst Michael Baker said.
“This dynamic, which is likely to persist, makes it painful to own (shares of) retailers in the current environment.”
The company predicted annual operating margins to be around 6% compared to a prior forecast of 8% or higher. Its first-quarter net profit fell to $1.01 billion. Its adjusted profit of $2.19 per share missed expectations of $3.92.
Still revenue rose 4% to $25.17 billion, helped by its strategy to undercut peers by keeping a large section of its products affordable even at the cost of some short-term profitability.
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Options Traders Blast Target (TGT) Stock Ahead of Earnings
By: Schaeffer's Investment Research | May 17, 2022
• TGT is seeing some headwinds ahead of tomorrow's first-quarter earnings report
• Year-to-date, the equity is down more than 8%
Target Corporation (NYSE:TGT) is up next on the earnings docket, amid a retail-heavy week of quarterly reports. The company is set to posts first-quarter results before the open tomorrow, May 18. Last seen down 2.7% to trade at $213.34, TGT is currently getting dragged lower by Walmart's (WMT) slashed full-year profit forecast. Below, we will dive deeper into the stock's recent chart performance, and unpack how the shares have usually fared post-earnings.
Target stock hit its lowest level since early April earlier today, and is just off its third-straight week of losses. The equity has struggled since the $255 level rejected last month's rally, with the once-supportive 20-day moving average now guiding shares lower. Year-to-date, TGT carries a 8.2% deficit.
The equity has a mixed history of post-earnings reactions, finishing four of eight next-day sessions higher in the past two years, while four were lower. This includes a 12.7% pop in August 2020, and a 6.8% dip in March 2021. This time, options traders are pricing in an 8.9% swing for TGT after earnings, which is higher than the 6% move it averaged following its last eight reports, regardless of direction.
Options traders are already swarming the security. So far, 36,000 calls and 43,000 puts have crossed the tape, which is triple the intraday average. Most popular is the May 200 put, where positions are currently being opened, followed by the weekly 5/27 240-strike put.
It looks as though this penchant for puts has been the norm lately. This is per Target stock's Schaeffer's put/call open interest ratio (SOIR) of 1.16, which ranks higher than 98% of readings from the past year, indicating options players have rarely been more put-biased.
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Target (TGT) Earnings Preview: Resilience Amid Market Rout Shows Post-Pandemic Strength
By: Investing.com | May 17, 2022
• Reports Q1 2022 earnings Wednesday, May 18, before the open
• Revenue Expectation: $24.41B
• EPS Expectation: $3.06
When Target (NYSE:TGT) reports its latest quarterly earnings, the odds are that investors will see the discount retailer maintaining its growth trajectory untouched despite a tough Q1 2022 for the broader US economy.
Target’s share performance reflects this strength. After surging more than 80% during the past two years, the Minneapolis-based retailer proved a safer bet than many mega-cap technology names in the current market rout. TGT closed Monday at $219.25.
TGT Weekly Chart
According to the company’s latest guidance, stronger in-store traffic and growing demand for merchandise categories, including food, apparel, and home goods, will propel a single-digit increase this year, despite cost pressures and supply-chain hurdles.
Target sees revenue growth in the mid-single digits starting next year and beyond, while return on invested capital will be in the high 20% to 30% range.
This outlook signals that the company is in an excellent position to build on the extraordinary sales boom of the last two years while protecting profit margins from the current four-decade-high inflation.
That said, Target still faces macroeconomic headwinds, including labor shortages, supply-chain disruptions, and cost escalations, suppressing the company’s gross margins this year.
During its last earnings report in March, the company told investors it would add $300 million in wage and benefit expenses amid a tight US labor market.
Surging Online Sales
Despite pressure on margins, most analysts remain bullish on Target’s prospects due to its superior online capabilities and its market share gains during the pandemic.
In an Investing.com poll of 31 analysts, 23 rate TGT stock as “Outperform,” with a 12-month consensus price target, implying a 21.6% upside.
TGT Consensus Estimates
Source:Investing.com
Target’s strong performance during the past two years results from Chief Executive Officer Brian Cornell’s efforts to turn around Target’s retail outlets. He spearheaded the remodeling of hundreds of stores, introduced many affordable fashion brands, and bolstered the retailer’s e-commerce offerings.
Furthermore, Target focuses on investing in its stores while also growing digital sales. Amid supply chain disruptions, the company has been using its stores more as mini distribution centers for its booming digital business during the pandemic to fulfill online orders better. Around 19% of Target’s total sales are now digital, up from 8.8% in 2019.
The company is building large sortation centers and warehouses that use automation to quickly pack same-day delivery orders near city centers such as Chicago to expand the business faster, the Wall Street Journal reported citing executives.
In a note yesterday, Deutsche Bank named Target a top pick, advising clients to buy the stock after the recent weakness that it believes is “overdone.” RBC also reiterated Target as its top idea over the next 12 months.
Bottom Line
During Wednesday's report, Target may show some margin suppression due to higher costs, hurting many retailers this year. Nevertheless, in our view, this short-term challenge shouldn’t discourage long-term investors from holding this quality retail stock in their portfolios.
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Here's How Target (TGT) Looks Just Ahead of Q1 Earnings
By: Zacks Equity Research | May 16, 2022
Target Corporation (TGT) is likely to register a marginal increase in the top line when it reports first-quarter fiscal 2022 results on May 18, before market open. The Zacks Consensus Estimate for revenues is pegged at $24,460 million, indicating growth of 1.1% from the prior-year reported figure.
The bottom line of this general merchandise retailer is anticipated to decline year over year. Although the Zacks Consensus Estimate for earnings per share for the quarter under review has increased 1.4% to $3.00 over the past seven days, the figure still suggests a decline of 18.7% from the year-ago period.
Target has a trailing four-quarter earnings surprise of 21.3%, on average. In the last reported quarter, this Minneapolis, MN-based company surpassed the Zacks Consensus Estimate by 11.5%.
Key Factors to Note
Target has been deploying resources to enhance omni-channel capabilities, come up with new brands, refurbish stores and expand same-day delivery options to provide customers a seamless shopping experience. Markedly, it has been ramping up store openings and remodels, scaling up fulfillment services and enhancing supply chain capabilities. Customers have been opting for Target owing to its multi-category assortment of owned and exclusive brands as well as popular national brands.
However, Target is likely to have witnessed a modest acceleration in sales as soaring inflation has been pinching consumers’ pockets. Again, the company is up against last year’s record government stimulus that spurred demand above pre-pandemic levels. Also, digital comparable sales might have been soft compared with the year-ago period.
Meanwhile, demand is likely to have been skewed more toward essentials, which carry lower margins. Again, the impact of costs associated with digital fulfillment, supply chain and COVID-related expenses cannot be ruled out. We note that higher merchandise and freight costs hurt the gross margin in the last-reported quarter.
Target Corporation Price, Consensus and EPS Surprise
What the Zacks Model Unveils
Our proven model does not conclusively predict an earnings beat for Target this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. But that’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Target has an Earnings ESP of -0.93% and a Zacks Rank #2.
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7 Undervalued Dividend Stocks to Buy Now
By: InvestorPlace | May 16, 2022
• These dividend darlings can help you earn passive income to ride out the volatility in current markets
Target (TGT)
With a P/E ratio of 15.6, Target (NYSE:TGT) is trading right around its sector average. TGT stock is a dividend king. It’s increased its dividend in each of the last 51 years. And rock-solid fundamentals means the dividend is in no danger. For example, in the last quarter alone, the company generated nearly $2 billion in free cash flow (FCF).
Target remains a cult brand to its loyal customers. This allows the company to avoid getting into the price wars that can bedevil this sector. And the company’s early pivot to the omnichannel model turned out to be a savvy move during the pandemic.
The company is showing strong growth in its digital business that will help the company stay top-of-mind for those everyday items that consumers will still need to purchase.
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Will Target Disappoint Investors on Wednesday?
By: Motley Fool | May 15, 2022
• There's no shortage of potential worries heading into its first-quarter earnings announcement.
Investors have some big concerns heading into Target's (TGT -1.29%) first-quarter 2022 (ended April 30) earnings report on Wednesday. While the retailer is likely to report solid sales trends through early 2022, that growth pace might be slowing due to new pressures like inflation. Target is also facing a difficult comparison with soaring results from a year ago.
Let's take a closer look at how the chain might impress investors in its upcoming announcement on May 18.
Market share growing in several niches
Most investors who follow the stock are looking for Target to post modest sales gains, with revenue rising to about $24.4 billion from $24.2 billion a year ago. That small boost would still be impressive, considering that sales in early 2021 soared thanks to financial stimulus payments and a quickly expanding economy. Those factors aren't repeating in 2022, so investors will be happy to see even slight sales gains on Wednesday.
Watch for CEO Brian Cornell and his team to highlight Target's growing market share in several attractive niches like beauty and skincare, home furnishings, and apparel. Potential letdowns might come in the form of weak e-commerce sales compared to a year ago.
Target might blame supply chain issues and inflation for pressuring growth. It may also be seeing demand shift away from more profitable niches like home furnishings and toward essentials like groceries, which carry lower margins.
Weaker earnings expected
A key factor behind the outperformance of Target's stock through the pandemic has been its industry-thumping profit margin. Shoppers have flocked toward its premium brands and its ultra-fast delivery options, helping push margins well above that of peers like Walmart and Costco.
One big concern today is that this process will reverse itself as shopping trends revert toward normal. Fewer people are relying on home deliveries, after all, and consumers may be looking to save money by switching brands...
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StockNews.com Upgrades Target (TGT) to “Strong-Buy”
By: ABMN | May 14, 2022
• Target (NYSE:TGT – Get Rating) was upgraded by StockNews.com from a “buy” rating to a “strong-buy” rating in a research note issued on Thursday.
Other research analysts also recently issued research reports about the stock. Jefferies Financial Group lowered their price target on shares of Target from $260.00 to $252.00 and set a “hold” rating for the company in a report on Wednesday, March 2nd...
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Earnings Previews: Target Corp. (NYSE: TGT)
By: 24/7 Wall St. | May 16, 2022
• Here is a look at two companies due to report results before markets open on Wednesday.
Target
Target Corp. (NYSE: TGT) stock has added about 9.8% to its share price over the past 12 months. The company recently made several changes to its executive leadership team, but investors will be paying more attention to the company’s same-store sales results. Are consumers still spending, and what does the company expect going forward? Comparisons to last year’s sales will be further compressed by the jump in sales last year following the lifting of pandemic restrictions and federal payments to consumers.
Of 30 analysts covering Target, 22 have a Buy or Strong Buy rating and seven others rate the shares at Hold. At a share price of around $219.75, the upside potential based on a median price target of $275.00 is about 25.1%. At the high price target of $353.00, the upside potential is 60.6%.
The consensus first-quarter 2023 revenue estimate is $24.46 billion, down 21.1% sequentially but up 1.1% year over year. Adjusted EPS are forecast at $3.06, down 4% sequentially and down 17.1% year over year. For the full year, analysts expect Target to report EPS of $14.62, up 7.8%, on sales of $109.8 billion, up 3.6%.
Target stock trades at 15.o times expected 2023 EPS, 13.9 times estimated 2024 earnings of $15.83 and 12.8 times estimated 2025 earnings of $17.12 per share. The stock’s 52-week range is $184.00 to $268.98. The company pays an annual dividend of $3.60 (yield of 1.64%). Total shareholder return for the past year is 6.9%.
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