Target Corp

Target Corp Sales Surge Over 17% in Holiday Season; Target Price $211

The eighth-largest retailer in the United States Target Corp said comparable sales in holiday period grew more than 17%, driven largely by a 4.3% increase in traffic and a 12.3% increase in average ticket.

The retail corporation said its store-originated comparable sales grew over 4%, while comparable digital sales doubled.

Target Corp shares closed about 2% higher at $199.10 on Tuesday; the stock rose 40% in 2020.

“Shares of Target have increased and outperformed the industry in the past six months. The company has been deploying resources to enhance omnichannel capabilities, come up with new brands, refurbish stores and expand same-day delivery options to provide seamless hopping experience. Markedly, the company has been making multiple changes to its business model to adapt and stay relevant in the ever-evolving retail and scape,” noted analysts at ZACKS Research.

“Target’s impressive third-quarter fiscal 2020 performance is the testimony of the same, wherein both the top and the bottom lines grew year-over-year. Notably, comparable sales rose for the 14th straight quarter, gaining from strength in the digital channel as consumers shift to online shopping amid coronavirus-led social distancing. Target witnessed sturdy market-share gains in all five core merchandise categories”

Target Corp Stock Price Forecast

Nineteen analysts who offered stock ratings for Target Corp in the last three months forecast the average price in 12 months at $194.83 with a high forecast of $211.00 and a low forecast of $175.00. The average price target represents a -2.14% decrease from the last price of $199.10. From those 19 analysts, 14 rated “Buy”, five rated “Hold” and none rated “Sell”, according to Tipranks.

Morgan Stanley gave a base target price of $180 with a high of $225 under a bull scenario and $125 under the worst-case scenario. The firm currently has an “Equal-weight” rating on the mass-market retail company’s stock.

Several other analysts have also recently commented on the stock. Credit Suisse raised the target price to $211 from $192. Goldman Sachs upped the target price to $212 from $194. Target had its target price increased by Raymond James to $200 from $180. They currently have a strong-buy rating on the retailer’s stock.

In addition, MKM Partners upgraded shares of Target from a sell rating to a neutral rating and increased their price target for the stock to $156 from $127. Telsey Advisory Group reaffirmed an outperform rating and set a $175 target price. At last, Jefferies Financial Group started coverage and set target price at $180.00.

Analyst Comments

“Target Corp (TGT) has firmly established itself as a winner in Retail and deserves a premium multiple vs. historical valuations. Although the business is delivering strong results, we believe the stock price already reflects high expectations,” said Simeon Gutman, equity analyst at Morgan Stanley.

“We see a positive risk/reward skew but think results will moderate and the stock path may be uneven, keeping us Equal-weight.”

Upside and Downside Risks

Risks to Upside: 1) A sustained pickup in comps. 2) Less gross margin pressure/more expense leverage than anticipated. 3) Step up in buybacks boosts EPS growth. 4) A new real estate monetization strategy– highlighted by Morgan Stanley.

Risks to Downside: 1) Comps moderate as TGT laps tough compares. 2) Disappointing GM trajectory due to greater than anticipated headwinds from the digital mix shift, negative category mix shift, and markdowns. 3) High expense growth due to wage inflation.