Minneapolis, Minnesota-based Target Corporation (TGT) owns and operates general merchandise stores. Valued at $68.1 billion by market cap, the company focuses on merchandising operations, which include general merchandise and food discount stores and a fully integrated online business. TGT also offers credit to qualified applicants through its branded proprietary credit cards.
Companies worth $10 billion or more are generally described as “large-cap stocks,” and TGT perfectly fits that description, with its market cap exceeding this mark, underscoring its size, influence, and dominance within the discount stores industry. TGT has built a decades-long reputation for style, quality, and value, driving growth through increased customer traffic and loyalty. With over 1,950 stores in urban and suburban areas, Target effectively serves an affluent demographic seeking a unique shopping experience, solidifying its position as a retail leader.
Despite its notable strengths, TGT slipped 18.4% from its 52-week high of $181.86, achieved on Apr. 1. Over the past three months, TGT stock has gained 1.1%, underperforming the S&P 500 Index’s ($SPX) 3.2% gains during the same time frame.
In the longer term, shares of TGT rose 4.2% on a YTD basis and climbed 21.3% over the past 52 weeks, underperforming SPX’s YTD gains of 17.3% and solid 25.4% returns over the last year.
To confirm the bearish trend, TGT has been trading below its 200-day moving average recently. However, it is trading above its 50-day moving average since mid-August.
The reasons behind TGT's overall underperformance can be traced back to inventory mismanagement, leading to excessive stock of higher-priced items and subsequent discounting that impacted gross margin and profitability. Additionally, investor concerns about consumer spending, bloated inventory, and inflationary pressures have contributed to the stock’s underperformance. Given Target's reliance on consumer spending and susceptibility to economic cycles, the company remains vulnerable to external market factors.
On Aug. 21, TGT shares closed up more than 10% after reporting its Q2 results. Its revenue increased 2.6% year over year to $25 billion. The company’s adjusted EPS of $2.57 was better than the consensus of $2.18. For Q3, it expects its adjusted EPS to be between $2.10 and $2.40. TGT expects full-year adjusted EPS to be between $9 and $9.7.
Target’s rival, Dollar General Corporation (DG), has had a rough ride. DG's shares plummeted 38.8% in 2024 alone and 32.8% over the past 52 weeks.
Wall Street analysts are moderately bullish on TGT’s prospects. The stock has a consensus “Moderate Buy” rating from the 32 analysts covering it, and the mean price target of $176.45 suggests a potential upside of 18.9% from current price levels.
On the date of publication, Neha Panjwani did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
