Target Corporation
Yesterday, the company reported better-than-expected second-quarter financial results and raised its outlook.
Target has raised its full-year 2024 adjusted EPS outlook to a range of $9.00 to $9.70, up from the previous range of $8.60 to $9.60. This new outlook compares to an estimate of $9.36.
Analysts covering the retail behemoth provided their takes:
- BofA Securities analyst Robert F. Ohmes reiterated the Buy rating on Target, raising the price forecast to $195 from $190.
- Telsey Advisory analyst Joseph Feldman reiterated the Outperform rating, raising the price forecast to $195 from $190.
The forecast for the second half comps remains at +2%, the analyst adds. Despite a volatile macroeconomic environment, Ohmes sees recent comp trends to persist, driven by Target's enhanced value proposition and merchandising as it supports growth through the back-to-school and holiday seasons.
Ohmes expects the firm's gross margins to receive sustained long-term support from the expansion of sortation centers (currently 11 in operation) and growth in Roundel, which is anticipated to increase in the high teens this year.
The FY25 gross margin forecast includes only a modest benefit from shrinkage accruals.
However, Ohmes sees potential for additional upside from shrinkage if overall loss rates decrease year-over-year.
Telsey Advisory Group: According to Feldman, Target is poised to benefit from its value-driven approach and strategic initiatives, including private brands, new store openings, remodels, supply chain improvements, digital advancements like Drive Up, an upgraded loyalty program and the Target+ marketplace.
Additionally, the company continues to enhance the customer experience and product offerings through partnerships with popular brands such as Apple Inc.
These efforts are expected to drive robust sales and earnings growth in the future.
For the third quarter, the analyst raised the EPS estimate by $0.01 to $2.35, driven by an improved operating margin of approximately 60 basis points to 5.8%, up from the previous 5.7%.
This increase was partly offset by a lower comparable sales forecast of 1.5%, compared to the previous 2.5% estimate.
For 2024, the EPS estimate was raised to $9.70 from $9.52.
TGT Price Action: Target shares are trading lower by 1.55% to $156.80 at last check Thursday.
