Valued at a market cap of $69.3 billion, Minnesota-based Target Corporation (TGT) operates as a leading general merchandise retailer, boasting nearly 1956 stores and 59 supply chain facilities across the U.S. Evolving into an omnichannel entity, the company offers a wide array of owned and premium branded goods, modernizing its supply chain and digital channels to compete effectively in the retail sector.
Shares of this general merchandise retailer have underperformed the broader market over the past 52 weeks. TGT has gained 9.2% over this time frame, while the broader S&P 500 Index ($SPX) has rallied 23.9%. In 2024, shares of TGT are up 6.5%, compared to SPX's 9.3% gains on a YTD basis.
However, narrowing the focus, TGT has overshadowed the S&P 500 Cons Staples Sector SPDR's (XLP) 3.8% gains over the past 52 weeks and 5.4% return on a YTD basis.
TGT's underperformance relative to the broader SPX is primarily due to the stubborn inflation, which has been squeezing consumer spending and denting the company's discretionary sales. Also, the company’s weaker-than-expected financial guidance, inventory challenges, and Red Sea shipping delays have further weighed down on the company’s prospects.
Moreover, the stock dropped 8% on May 22 after its Q1 earnings results missed revenue and EPS expectations, weaker-than-expected guidance for fiscal Q2 and full year, and a continued decline in same-store sales.
For the current fiscal year, ending in January 2025, analysts expect TGT's EPS to grow by 4.3% to $9.32. The company's earnings surprise history is mixed. It beat the consensus forecast in three of the past four quarters while missing on one other occasion.
Among the 30 analysts covering the stock, the consensus rating is a “Moderate Buy.” That’s based on 16 “Strong Buy” ratings, four “Moderate Buys,” and 10 “Holds.”
This configuration is slightly more bullish than a month before, with 15 analysts suggesting a "Strong Buy."
On May 23, UBS Group (UBS) adjusted Target Corporation's price target to $185 and maintained a "Buy" rating, citing the retailer's positive aspects of Q1 results and potential for revenue and margin growth amidst macroeconomic volatility. This new price target suggests a 23.4% potential upside from the current price levels.
The mean price target of $180.61 represents a premium of 20.5% to TGT's current levels. The Street-high price target of $220 implies a potential upside of 46.8% from the current price levels.
On the date of publication, Sohini Mondal 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.
