Target Corporation (TGT) shares traded lower on Thursday despite the company exceeding expectations with its second-quarter financial results and raising its full-year outlook. The retailer’s strong performance prompted analysts to reiterate their bullish sentiment.
Target’s raised full-year 2024 adjusted EPS outlook to a range of $9.00 to $9.70, surpassing the previous range of $8.60 to $9.60, and outperforming analyst estimates of $9.36.
BofA Securities analyst Robert F. Ohmes maintained a Buy rating on Target, raising the price forecast to $195 from $190. The analyst attributed this positive outlook to Target’s robust second-quarter performance and anticipated sustained strength in gross margins. Ohmes highlighted that despite a volatile macroeconomic environment, recent sales trends are expected to continue, driven by Target’s enhanced value proposition and merchandising.
Telsey Advisory analyst Joseph Feldman echoed this optimism, reaffirming an Outperform rating and raising the price forecast to $195 from $190. Feldman emphasized Target’s strategic initiatives, including private brands, new store openings, remodels, supply chain improvements, digital advancements like Drive Up, and an upgraded loyalty program. These initiatives are expected to drive robust sales and earnings growth.
For the third quarter, Feldman raised the EPS estimate by $0.01 to $2.35, driven by an improved operating margin of approximately 60 basis points to 5.8%. This positive outlook is tempered by a lower comparable sales forecast of 1.5%, compared to the previous 2.5% estimate.
Overall, despite the stock’s dip, Target’s strong performance and positive outlook suggest a bright future for the company. The retailer’s value-driven approach, strategic initiatives, and potential for sustained growth have analysts confident in Target’s ability to navigate the current economic landscape and deliver strong results in the coming quarters.
