Target Corporation (TGT), based in Minneapolis, Minnesota, operates a network of general merchandise stores. Valued at a market capitalization of $70.7 billion, the company specializes in general merchandise and food discount retailing, alongside a fully integrated e-commerce platform. Additionally, Target provides credit services through its proprietary credit cards for eligible applicants.
Shares of this discount behemoth have underperformed the broader market over the past year. TGT has gained 16.6% over this time frame, while the broader S&P 500 Index ($SPX) has rallied nearly 30.4%. In 2024, TGT stock is up 6.8%, while the SPX is up 23.1% on a YTD basis.
Narrowing the focus, TGT also trails behind the Vaneck Retail ETF’s (RTH) 24.6% gains over the past 52 weeks and an 18.2% rise on a YTD basis.
Target's underwhelming performance over the past year can be attributed to consumers prioritizing budget management and seeking value, which dampens demand for non-essential items, potentially slowing sales growth. Despite efforts to provide attractive value, inventory mismanagement has negatively affected gross margins and profitability. Additionally, concerns over consumer spending, excess inventory, and inflation have weighed on the stock, as Target remains heavily reliant on consumer spending and vulnerable to economic cycles.
However, on August 21, Target's shares surged more than 10% following the release of its Q2 earnings report. The company posted a 2.6% year-over-year revenue increase, reaching $25 billion, with adjusted EPS of $2.57, exceeding the consensus estimate of $2.18. For Q3, Target projects adjusted EPS between $2.10 and $2.40, while full-year adjusted EPS is expected to range from $9 to $9.70.
For the current fiscal year, ending in January, analysts expect TGT’s EPS to grow 6.8% to $9.55 on a diluted basis. The company’s earnings surprise history is mixed. It beat the consensus estimate in three of the last four quarters while missing the forecast on another occasion.
Among the 33 analysts covering TGT stock, the consensus rating is a “Moderate Buy.” That’s based on 17 “Strong Buy” ratings, three “Moderate Buys,” 12 “Holds,” and one “Strong Sell.”
This configuration is slightly more bullish than two months ago, with 16 analysts suggesting a “Strong Buy.”
On November 14, Telsey Advisory Group analyst Joseph Feldman reaffirmed his “Outperform” rating on Target and maintained a price target of $195.
The mean price target of $178.78 represents a 16.2% premium to TGT’s current price levels. The Street-high price target of $210 suggests an ambitious upside potential of 38%.
