On Aug. 15, Target Corporation
The imminent catalyst for Target is its upcoming release of Q2 financial results, scheduled for Aug. 16 before the market opens.
Analysts on Wall Street are anticipating a consensus earnings-per-share (EPS) of $1.43, nearly doubling the figures from the corresponding quarter of the previous year, which stood at $0.77. Notably, Target outperformed earnings expectations in both Q1 2023 with a 16% beat and Q4 2022 with a 35% beat.
While revenue forecasts project a slight decline to $25.2 billion for Q2 2023, compared to $26.03 billion from the same period last year, Target has showcased its ability to surpass revenue predictions by a slim margin in the previous four releases.
Technical Analysis: Target Corp
On the technical analysis front, the stock's price recently dipped below the crucial support at $128, a level that had held during July and August. This decline saw a retest of the lows set back in June.
The stock's attempts in late July to break through the resistance offered by the 50-day moving average were denied, resulting in the most recent bearish price action.
Meanwhile, the relative strength index (RSI), a widely used momentum indicator, has once again entered the oversold territory.
It's worth noting that in a prior instance when Target ventured into oversold territory in late May, the signal didn't yield the expected trend reversal. Subsequently, the company's shares experienced further losses, dropping to $126 by June 1, with the RSI plummeting to the 20 mark.
A retest of the lows around $115 (8% below the current price) hit in June 2020 cannot be ruled out if the company reports weaker-than-expected earnings and trims profit outlooks for the next quarters.
Shares could successfully bounce back on the double-bottom/oversold RSI signal if the Q2 results outperform expectations and the company provides a stronger outlook for the following quarters. In this case, bulls could potentially retest the 50-day moving average resistance mark at $132 (6% higher).
Target's year-to-date decline now stands at 17%, with a substantial drawdown of over 50% from its peak in November 2021. The company's stock is currently trading at levels similar to those seen in January 2020, before the onset of the Covid-19 pandemic.
