5 Million More Hours! It’s About To Be A Busy Holiday Season For Target Workers

Target workers will have to put in more hours during the holiday period as the company wants them to work 5 million more hours during that period.

Target Reduces Seasonal Hires

Target has announced earlier today that it has reduced its season hires for this year. This would lead to its workers putting in over five million more hours during the holiday period as demands for goods start to come in.

The company revealed this earlier today, stating that as it prepares for a rush of shoppers at stores and on its website, it doesn’t intend to hire as many seasonal workers the upcoming holidays as it has done in the past two years.

The retailer said about 300,000 of its current employees would need to put in five million more hours of work during the holiday period. The additional hours translates into $75 million additional pay for its workers.

Target said it intends to hire 100,000 seasonal workers during the holiday period. However, that is below the 130,000 seasonal workers it has hired over the past two years. Target has more than 1,900 stores across the United States and nearly 350,000. During the summer, Target launched an app that allows its employees to pick up extra shifts. The workers can choose times or swap hours on-demand. Thus, enabling workers to adjust their working hours for other obligations such as parenting or attending a college class.

Target’s Chief Human Resource Officer Melissa Kremer said the new changes were prompted by the pandemic. She added that the pandemic made it necessary for Target to adopt a flexible working condition.

TGT stock chart. Source: FXEMPIRE

TGT Is Up By Less Than 1%

The shares of Target are trading in the green zone and are up by less than 1% since the market opened an hour ago. TGT is trading at $243 per share at the time of this writing. Year-to-date, TGT is up by nearly 40%. The stock started the year trading at $175 per share, but it is now trading at $243.

Retail outlets like Target are expected to have a busy holiday period as activities in the US and other parts of the world start returning to normal.

Target Surpasses Earnings Estimates, But Stock Price Dips

The shares of Target are down by roughly 3% today despite the company reporting better-than-expected second-quarter earnings.

Target Reports Excellent Q2 Earnings

Target, a leading retailer in the United States, reported its second-quarter earnings earlier today. The company’s earnings surpassed analysts’ estimation, but its stock continues to trade in the red zone.

According to the retail giant, the earnings per share in Q2 was $3.64, surpassing the $3.49 Refinitiv consensus. Furthermore, the revenue of $25.16 billion also surpassed the $25.08 predicted by leading Wall Street analysts.

Target’s net income rose from $1.7 billion, or $3.35 per share in the same quarter last year, to currently stand at $1.82 billion, or $3.65 per share. Furthermore, the revenue went up by 9.5% to $25.16 billion from the same period last year.

The company’s profits were twice that of 2019, with Target struggling prior to the pandemic. CEO Brian Cornell revealed that the increase in sales is down to the pandemic easing and parents resuming work while their children prepared for school. He added that parents purchased backpacks, lunchboxes and school uniforms ahead of the new school year. The CEO added that college students were amongst the top spenders in the last quarter.

Target expects to see its comparable sales increase in the coming quarter. The comparable sales are a crucial metric that tracks sales online and at stores open for at least 12 months. The retailer said comparable sales should increase by high single digits in the second half of 2021.

Target’s Stock Price Down By 2.79% Today, Performs Excellently YTD

The shares of Target are down by 2.79% today despite the company reporting better-than-expected Q2 earnings. Currently, the stock is trading at $254 per share. Despite the decline in price over the past few hours, Target has performed excellently year-to-date.

TGT stock chart. Source: FXEMPIRE

TGT began 2021 trading at $174 per share. However, it has rallied by over 40% in the past few months and now trades at $254 per share, making it one of the best-performing stocks in the United States.

Target Corp to Benefit From Back-To-School Sales; Stocks Could Hit New Highs

Target Corp, one of the largest North American retailers offering customers both everyday essentials and fashionables, is expected to report its second-quarter earnings of $3.49 per share, which represents year-over-year growth of over 3% from $3.38 per share seen in the same period a year ago.

In the last four consecutive quarters, on average, the company has delivered an earnings surprise of over 69%. The Minneapolis, Minnesota-based company would post year-over-year revenue growth of over 8% to $24.84 billion.

Target Corp shares have gained about 50% so far this year. The stocks ended 0.61% higher at $263.15 on Monday. Wednesday’s better-than-expected results could help the stock hit new all-time highs.

On the other hand, the Bentonville, Arkansas-based retailer Walmart is expected to report its second-quarter earnings of $1.56 per share same as a year ago. However, the multinational retail corporation that operates a chain of hypermarkets’ revenue would decline over 1% to $135.9 billion. On average, the retail giant has beaten earnings estimates by over 17% in the last four quarters.

Analyst Comments

Walmart (WMT) & Target Corp (TGT) likely to print upside given strong comp sales trends, a healthy consumer bolstered by child tax credits, & one of the best back to school seasons in retail. We prefer TGT given prospects of a greater beat and a lower relative valuation. We also enclose: Cowen’s Target x ULTA analysis, & our online grocery survey highlights WMT’s momentum. Raise TGT price target to $300 & maintain WMT’s $170 price target,” noted Oliver Chen, equity analyst at Cowen.

“We are bullish on the back-to-school market share opportunity, and expect outsized growth at both. Both are well-positioned as their multi-category portfolios should result in benefits across apparel, electronics, school supplies, home, and other categories. That being said, we ultimately give the edge to TGT given its stronger apparel and home assortment, and overall mix of total sales towards these categories.”

Target Corp Stock Price Forecast

Eighteen analysts who offered stock ratings for Target Corp in the last three months forecast the average price in 12 months of $260.76 with a high forecast of $305.00 and a low forecast of $216.00.

The average price target represents a -0.91% change from the last price of $263.15. From those 18 analysts, 14 rated “Buy”, four rated “Hold” while none rated “Sell”, according to Tipranks.

Morgan Stanley gave the base target price of $250 with a high of $290 under a bull scenario and $180 under the worst-case scenario. The firm gave an “Equal-weight” rating on the big-box retailer’s stock.

Target Corp (TGT) has firmly established itself as a winner in Retail and deserves a premium multiple vs. historical valuations. TGT is gaining market share on top of 2020’s wallet share gains, we think TGT is one of the more attractive ways to play the upside to GDP. We see a positive risk/reward skew in the N-T but results could moderate and the stock path may be uneven, keeping us Equal-weight,” noted Simeon Gutman, equity analyst at Morgan Stanley.

Several other analysts have also updated their stock outlook. Telsey Advisory Group raised the stock price forecast to $305 from $265. Deutsche Bank lifted the price target to $305 from $258. JPMorgan upped the target price to $280 from $260.

Check out FX Empire’s earnings calendar

Perfect Time to Take Target Profits

Target Corp. (TGT) reports Q2 2021 earnings ahead of Wednesday’s opening bell, with analysts expecting a profit of $3.52 per-share on $25.02 billion in revenue. If met, earnings-per-share (EPS) will mark a modest 5% profit increase compared to the same quarter in 2020, when the world emerged from the first lockdown. The stock rallied 6.1% in May after blowing away Q1 top and bottom line estimates and has carved a long series of new highs into August.

Red Hot Two Year Returns

The retail giant has been a blisteringly-hot performer so far in 2021, posting a 48% year-to-date return on top of last year’s 37% return. In fact, it hasn’t touched the 50-month moving average since May 2019 despite repeated trips into that level between 2014 and 2018. Therein lies the problem for sidelined investors, i.e. the stock is universally loved and extremely overbought, significantly raising odds for an intermediate correction lasting weeks or months.

Target has benefited from the pandemic, capturing retail market share from less-prepared rivals. Skyrocketing GDP in the first half also underpinned performance, with Americans catching up on deferred purchases. The Delta variant has impacted that trajectory but we really don’t know the extent of renewed headwinds. Walmart Inc.’s (WMT) confessional on Tuesday morning could impact that calculation … and the reaction to Wednesday’s report.

Wall Street and Technical Outlook

Wall Street consensus has eased to an ‘Overweight’ rating, based upon 19 ‘Buy’, 2 ‘Overweight’, and 6 ‘Hold’ recommendations. One analyst recommends that shareholders close positions and move to the sidelines. Price targets currently range from a low of $176 to a Street-high $305 while the stock closed Friday more than $3 above the median $258 target. This indicates that Target is fully-valued, raising doubts that earnings will yield a buying opportunity.

Target underperformed between 2015 and 2019, held down by a well-publicized data breach. It broke out in August 2019, entering a powerful uptrend that tested new support successfully in March 2020. The stock has almost tripled in price since that time while carving just one deep pullback. It’s been glued to the top 20-month Bollinger Band throughout 2021 but long term relative strength just hit the most extreme overbought technical reading since 1967.

For a look at all of today’s economic events, check out our economic calendar.

Disclosure: the author held no positions in aforementioned securities at the time of publication. 

Earnings to Watch Next Week: Home Depot, Walmart, Target and Deere in Focus

Earnings Calendar For The Week Of August 16

Monday (August 16)

Ticker Company EPS Forecast
ATAI ATA -$0.18
FN Fabrinet $1.21
AG First Majestic Silver $0.09
TOELY Tokyo Electron Ltd PK $1.22

Tuesday (August 17)

IN THE SPOTLIGHT: HOME DEPOT, WALMART

HOME DEPOT: the largest home improvement retailer in the United States, is expected to report its second-quarter earnings of $4.42 per share, which represents year-over-year growth of about 10% from $4.02 per share seen in the same period a year ago.

The home improvement retailer would post revenue growth of nearly 7% to $40.68 billion. On average, Home Depot has beaten earnings estimates by more than 10% in the last four quarters.

“We are Overweight Home Depot (HD) given its best-in-class nature and structural housing tailwinds beyond N-T disruption from COVID-19. The stock seems attractively valued in the context of a potential 2H’20/2021 economic/housing boom,” noted Simeon Gutman, equity analyst at Morgan Stanley.

WALMART: The Bentonville, Arkansas-based retailer is expected to report its second-quarter earnings of $1.56 per share same as a year ago. However, the multinational retail corporation that operates a chain of hypermarkets’ revenue would decline over 1% to $135.9 billion. On average, the retail giant has beaten earnings estimates by over 17% in the last four quarters.

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE AUGUST 17

Ticker Company EPS Forecast
AIT Applied Industrial Technologies $1.17
HD Home Depot $4.42
WMT Walmart $1.57
AMCR Amcor PLC $0.22
A Agilent $0.99
CDK Cdk Global $0.67
JKHY Jack Henry Associates $0.93
CREE Cree -$0.24

Wednesday (August 18)

IN THE SPOTLIGHT: TARGET

TARGET: One of the largest North American retailers offering customers both everyday essentials and fashionables, is expected to report its second-quarter earnings of $3.49 per share, which represents year-over-year growth of over 3% from $3.38 per share seen in the same period a year ago.

In the last four consecutive quarters, on average, the company has delivered an earnings surprise of over 69%. The Minneapolis, Minnesota-based company would post year-over-year revenue growth of over 8% to $24.84 billion.

Walmart (WMT) & Target (TGT) likely to print upside given strong comp sales trends, a healthy consumer bolstered by child tax credits, & one of the best back to school seasons in retail. We prefer TGT given prospects of a greater beat and a lower relative valuation. We also enclose: Cowen’s Target x ULTA analysis, & our online grocery survey highlights WMT’s momentum. Raise TGT PT to $300 & maintain WMT’s $170 PT,” noted Oliver Chen, equity analyst at Cowen.

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE AUGUST 18

Ticker Company EPS Forecast
LOW Lowe’s Companies $3.99
TGT Target $3.49
ADI Analog Devices $1.61
EAT Brinker International $1.71
TJX TJX Companies $0.58
VIPS Vipshop $2.32
YY YY -$0.60
NVDA Nvidia $1.02
KEYS Keysight Technologies $1.44
SNPS Synopsys $1.78
CSCO Cisco Systems $0.83
SQM Sociedad Quimica Y Minera De Chile $0.32
VNET 21Vianet -$0.06
TCEHY Tencent $0.52
MBT Mobile TeleSystems OJSC $20.23

Thursday (August 19)

IN THE SPOTLIGHT: KOHL’S

Kohl’s, the largest department store chain in the United States, is expected to report its second-quarter earnings of $1.17 per share, which represents year-over-year growth of over 565% from a loss of -$0.25 per share seen in the same period a year ago.

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE AUGUST 19

Ticker Company EPS Forecast
KSS Kohl’s $1.17
TPR Tapestry Inc $0.68
EL Estée Lauder $0.51
M Macy’s $0.19
BJ BJs Wholesale Club Holdings Inc $0.63
MSGS Madison Square Garden Sports -$0.76
AMAT Applied Materials $1.77
ROST Ross Stores $0.97
FTCH Farfetch -$0.30
NCMGY Newcrest Mining Ltd PK $0.75
GFI Gold Fields $0.47

Friday (August 20)

IN THE SPOTLIGHT: DEERE

Deere & Company, the world’s largest maker of farm equipment, is expected to report its fiscal third-quarter earnings of $4.57 per share, which represents year-over-year growth of over 77% from $2.57 per share seen in the same period a year ago.

In the last four consecutive quarters, on average, the agricultural, construction, and forestry equipment manufacturer has delivered an earnings surprise of over 65%. The company forecasts net income for fiscal 2021 in the range of $5.3 billion to $5.7 billion, up from the previous projection of $4.6 billion to $5 billion, according to ZACKS Research.

Deere (DE) is one of the highest quality, most defensive names within the broader Machinery universe, given a historically lower cyclicality of Ag Equipment and history of strong management execution. FY21 should mark a tangible acceleration in the NA large ag replacement cycle, as commodity tailwinds are complemented by moderating trade headwinds and improving farmer sentiment,” noted Courtney Yakavonis, equity analyst at Morgan Stanley.

“With mgmt continuing to execute against its 15% mid-cycle operating margin target, we see continued momentum in DE’s margin improvement narrative – representing one of the most attractive idiosyncratic margin improvement narratives in the broader Machinery group.”

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE AUGUST 20

Ticker Company EPS Forecast
DE Deere & Company $4.57
BKE Buckle $0.51
FL Foot Locker $0.97

 

Costco Losing Altitude Despite Strong Quarter

Costco Wholesale Corp. (COST) sold off more than 2% on Friday despite beating Q3 2021 top and bottom line estimates by healthy margins. The big box retailer earned $2.75-per-share during the quarter, $0.47 better than expectations, while revenue rose a healthy 21.8% year-over-year to $44.38 billion, more than $500 million higher than consensus. U.S. sales rose 15.2% while e-commerce sales eased off the torrid 2020 pace, rising a still-impressive 38.2%.

Weak Buying Interest

The stock is finally trading in the green for 2021 following a steep first quarter decline that shed nearly 20%. A broad-based rotation out of the COVID-19 beneficiaries and into recovery plays dampened buying interest after last year’s impressive 29% return and it’s been slow to return.  Even so, Costco was trading at a 35.5 forward price-to-earnings (P/E) ratio before the report, marking a premium to rivals Walmart Corp. (WMT) and Target Corp. (TGT).

Telsey Advisory Group analyst Joseph Feldman raised his target to $415 on Friday, noting “Costco should remain a share gainer, with its solid sales, high membership renewal rates (110MM total members), and square footage growth of LSD. In FY22, Costco should continue to generate solid EPS growth, driven by a MSD comp, MSD-HSD membership fee income growth, healthy digital growth, and lapping COVID-19 related costs. We maintain our Outperform rating.”

Wall Street and Technical Outlook

Wall Street consensus stands at an ‘Overweight’ rating after last year’s strong performance, underpinned by 19 ‘Buy’, 4 ‘Overweight’, 10 ‘Hold’, and 2 ‘Underweight’ recommendations. Price targets currently range from a low of $249 to a Street-high $415 while the stock closed Friday’s session more than $35 below the median $416 target. This low placement highlights Main Street discomfort with the higher-than-historical valuation.

Costco has been a superior performer for more than a decade, posting a long series of new highs. It broke out above February 2020 resistance at 325 in July and entered a healthy uptrend that posted an all-time high at 393.15 in November. The subsequent decline found support at 307 in March while a V-shaped recovery into May stalled four points below the 2020 peak. Weak accumulation during the uptick has failed to reach prior highs, setting the stage for mixed two-sided price action into the second half.

For a look at all of today’s economic events, check out our economic calendar.

Disclosure: the author held no positions in aforementioned securities at the time of publication. 

Target Shares Hit All-Time High After Earnings Beat Estimates

Target Corp shares scaled its fresh all-time high on Wednesday after the Minneapolis, Minnesota-based retailer reported better-than-expected earnings and revenue in the first quarter.

One of the largest North American retailers that offer customers both everyday essentials and fashionables said its first-quarter adjusted earnings per share rose 525% higher year-on-year to $3.69, beating the Wall Street consensus estimates of $2.26 per share.

The mass-market retail company said its comparable sales grew 22.9% in the first quarter, reflecting comparable store sales growth of 18% and comparable digital sales growth of 50%. Total revenue of $24.2 billion grew 23.4% compared with last year, driven by total sales growth of 23.3% and a 30.4% increase in other revenue. That was higher than the market expectations of $21.51 billion.

For the second quarter of 2021, the company forecasts mid-to-high single-digit growth in comparable sales. The company expects its second-quarter operating margin rate will be well above the second quarter 2019 rate of 7.2%, but likely not as high as last year’s unprecedented 10%.

The Company expects positive single-digit comparable sales growth in the last two quarters of the year and expects its full-year operating margin rate will be well above the 2020 rate of 7.0%, with the potential to reach 8% or somewhat higher.

Following the upbeat results, Target Corp stock rose over 5% to $217.47 on Wednesday.

Analyst Comments

Target’s (TGT) EPS of $3.69 handily beat Cowen and Street on comps +22.9%and EBIT margin reaching 9.8%. E-comm +50% on top of +141% & stores fulfilled more than 95% of sales. Raised FY21 outlook suggests TGT well-positioned to comp-the-comp. In Cowen’s view: TGT’s connected consumer & delivery innovation + proprietary product mix that resonates + stores & services = winning formula,” noted Oliver Chen, equity analyst at Cowen.

Target Corp Stock Price Forecast

Twenty analysts who offered stock ratings for Target Corp in the last three months forecast the average price in 12 months of $217.58 with a high forecast of $260.00 and a low forecast of $170.00.

The average price target represents a 0.22% increase from the last price of $217.10. Of those 20 analysts, 16 rated “Buy”, four rated “Hold” while none rated “Sell”, according to Tipranks.

Morgan Stanley gave the stock price forecast of $205 with a high of $260 under a bull scenario and $145 under the worst-case scenario. The firm gave an “Equal-weight” rating on the mass-market retail company’s stock.

“Major beat & major raise. Most confident guidance raise in our coverage as Target Corp (TGT) epitomizes ‘comping the comp.’ 2021 estimates could move to $12-$13, 2022 EPS power key,” noted Simeon Gutman, equity analyst at Morgan Stanley.

“We expect the stock to move meaningfully higher on these results. We suspect 2021 market expectations for EPS power could land in the $12-$13 range on 8% EBIT margins. This implies TGT is trading closer to 16x versus the current ~22x NTM multiple. 16x seems low relative to TGT’s peer set of high-quality Retail leaders.”

Several other analysts have also updated their stock outlook. Target had its stock price forecast lifted by stock analysts at Telsey Advisory Group to $235 from $215. The brokerage presently has an “outperform” rating on the retailer’s stock.

Moreover, Deutsche Bank raised the target price to $225 from $213. Jefferies upped the target price to $210 from $188. JP Morgan increased the target price to $233 from $230. UBS lifted the target price to $210 from $185.

Check out FX Empire’s earnings calendar

Walmart Struggling With Wage Inflation

Dow component Walmart Inc. (WMT) reports Q1 2022 earnings ahead of Tuesday’s opening bell, with analysts looking for a profit of $1.21 per-share on a staggering $131.5 billion in revenue. If met, earnings-per-share (EPS) will mark a slight profit increase compared to the same quarter last year. The stock fell nearly 13% in just two weeks after missing Q4 2021 estimates in February and providing weak fiscal year 2022 guidance.

Profits Impacted by Rising Wages

The retail giant has struggled since hitting an all-time high above 150 in December, held down by an exodus out of COVID-19 beneficiaries. Shrinking profit margins have now lifted to the top of investor concerns, with the company shifting more workers to full time employment while raising average hourly wages to over $15 per hour. However, that still doesn’t measure up with competitors Amazon.com Inc. (AMZN) and Target Corp. (TGT), raising odds for further wage pressure.

Recent reports also warn that Walmart is having trouble competing in the highly-lucrative grocery space, struggling to hold onto the top sales slot. According to Vox’s Recode, grocery sales are “losing market share rapidly”, which isn’t surprising because multiple competitors introduced curbside pickup services in 2020 to address the COVID-19 pandemic and have kept those initiatives in place due to their immense popularity.

Wall Street and Technical Outlook

Wall Street consensus remains modestly bullish, with an ‘Overweight’ rating based upon 21 ‘Buy’, 6 ‘Overweight’, 5 ‘Hold’, 1 ‘Underweight’, and 2 ‘Sell’ recommendations. Price targets currently range from a low of $120 to a Street-high $180 while the stock closed Friday’s session more than $20 below the median $160 target. This week’s report isn’t likely to change analyst sentiment, given growing inflationary pressure that could weigh on fiscal year results.

Walmart cleared 2000 resistance in the 60s in 2017 and entered an uptrend that carved a series of higher highs and higher lows into December’s all-time high at 153.66. The stock sold off to the 200-day moving average in March and bounced into the second quarter but is still trading in the lower half of the range established by that downdraft.  Accumulation has dropped to 2019 levels at the same time, raising odds for mixed price action into the second half of 2021.

For a look at all of today’s economic events, check out our economic calendar.

Disclosure: the author held no positions in aforementioned securities at the time of publication. 

Earnings to Watch Next Week: Home Depot, Walmart, Target and Deere in Focus

Earnings Calendar For The Week Of May 17

Monday (May 17)

Ticker Company EPS Forecast
DM Dominion Midstream Partners -$0.10
RYAAY Ryanair -$2.04

Tuesday (May 18)

IN THE SPOTLIGHT: HOME DEPOT, WALMART

HOME DEPOT: The largest home improvement retailer in the United States is expected to report its first-quarter earnings of $3.06 per share, which represents year-over-year growth of about 47% from $2.08 per share seen in the same period a year ago.

The home improvement retailer would post revenue growth of 21% to $34.2 billion. In the last four quarters, on average, Home Depot has beaten earnings estimates about 2%.

The Atlanta, Georgia-based company’s shares rose over 20% so far this year. Home Depot’s better-than-expected results, which will be announced on Tuesday, could help the stock hit new all-time highs. But the stock’s performance could hinge on margins.

“We expect a 25% to 30% Q1’21 comp as top-line strength likely continued through the quarter. We model gross margin down 40 bps. For context, in Q4 lumber inflation pulled gross margin down ~30 bps and likely worsened sequentially. On SG&A, assuming the per sq ft 2-year stack holds from Q4 (+24%), SG&A should lever 360 to 400 bps,” noted Simeon Gutman, equity analyst at Morgan Stanley.

“In our model, this combination produces EPS of $3.55 to $3.85 vs consensus at $2.95. While a ’21 guide was not provided, if the ’20 top-line exit rate held through ’21, HD would expect a flat to slightly positive comp and an EBIT margin of at least 14%.”

WALMART: The Bentonville, Arkansas-based retailer is expected to report its first-quarter earnings of $1.21 per share, which represents year-over-year growth of about 47% from $1.18 per share seen in the same period a year ago.

However, the multinational retail corporation that operates a chain of hypermarkets’ revenue would decline about 2% to $131.8 billion. In the last four quarters, on average, the retail giant has beaten earnings estimates about 9%.

“We raise 1Q22 EPS estimate to $1.23 from $1.22, on stronger Walmart U.S. comps, more modest SG&A deleverage, offsetting lower International segment revenues on divestitures, and remain above Street’s $1.21. We raise our Walmart U.S. comps to +0.5%, ahead of Street’s +0.3%, and our updated estimates now imply 2-year stack growth of +10.5% Y/Y, in-line with 4Q21,” noted Oliver Chen, equity analyst at Cowen.

“We expect a tailwind from stimulus, and improved apparel and other general merchandise categories, offset by grocery and other essential categories normalizing. Recall in 1Q21 Grocery improved +LDD, Health & Wellness +HSD, and General Merchandise +MSD.”

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE MAY 18

Ticker Company EPS Forecast
HD Home Depot $3.06
WMT Walmart $1.21
SE Spectra Energy -$0.45
NTES NetEase $6.35
BZUN Buzzi Unicem RSP $0.60
M Macy’s -$0.39
DQ Daqo New Energy $1.18
BIDU Baidu $10.63
KC Kutcho Copper -$0.16
STE Steris $1.79
TTWO Take Two Interactive Software $0.68
TCOM Trip.com Group Ltd -$2.05
JHX James Hardie Industries $0.29
TTM Tata Motors $0.47
MBT Mobile TeleSystems OJSC $19.37
AAP Advance Auto Parts $3.08
DY Dycom Industries $0.13
ASND Ascendant Resources -$2.06

Wednesday (May 19)

IN THE SPOTLIGHT: TARGET CORP

Target, one of the largest North American retailers offering customers both everyday essentials and fashionables, is expected to report its first-quarter earnings of $2.16 per share, which represents year-over-year growth of over 266% from $0.59 per share seen in the same period a year ago.

In the last four consecutive quarters, on average, the company has delivered an earnings surprise of over 60%. The Minneapolis, Minnesota-based company would post year-over-year revenue growth of over 9% to $21.51 billion.

Target’s better-than-expected results, which will be announced on May 19, would help the stock hit new all-time highs. Target shares rose over 19% so far this year.

“We raise 1Q21 EPS to $2.18E, ahead of Street’s $2.10 as we raise our comps estimate to+11.5%, and tweak margin assumptions. We now model comps +11.5%, yielding 2-year stack growth of +22.3%, accelerating sequentially by +30bps,” noted Oliver Chen, equity analyst at Cowen.

“We are ahead of Street’s+8.2% consensus estimate, and think our estimates could ultimately prove conservative as Target’s (TGT) category portfolio should see the retailer benefit from the stimulus, improving trends in apparel and other re-opening categories, along with continued strength in-home, which will more than offset normalizing food, essentials, and other category comps.”

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE MAY 19

Ticker Company EPS Forecast
VIPS Vipshop $2.19
JD JD.com $2.29
LOW Lowe’s Companies $2.59
CAE Cae USA $0.16
ADI Analog Devices $1.45
TGT Target $2.16
TJX TJX Companies $0.30
EXP Eagle Materials $1.23
RXN Rexnord $0.45
KEYS Keysight Technologies $1.33
CSCO Cisco Systems $0.82
LB L Brands $1.15
SNPS Synopsys $1.53
SQM Sociedad Quimica Y Minera De Chile $0.25
YY YY -$0.39
CPRT Copart $0.80
OMVJF OMV $0.97

Thursday (May 20)

Ticker Company EPS Forecast
MNRO Monro Muffler Brake $0.29
KSS Kohl’s $0.06
BRC Brady $0.65
RL Ralph Lauren -$0.75
HRL Hormel Foods $0.41
BJ BJs Wholesale Club Holdings Inc $0.56
PANW Palo Alto Networks $1.28
ROST Ross Stores $0.88
FLO Flowers Foods $0.40
AMAT Applied Materials $1.51
DECK Deckers Outdoor $0.67
TCEHY Tencent $0.54
TBLMY Tiger Brands Ltd PK $0.34

Friday (May 21)

IN THE SPOTLIGHT: DEERE & COMPANY

Deere & Company, the world’s largest maker of farm equipment, is expected to report its fiscal second-quarter earnings of $4.49 per share, which represents year-over-year growth of over 112% from $2.11 per share seen in the same period a year ago.

In the last four consecutive quarters, on average, the agricultural, construction, and forestry equipment manufacturer has delivered an earnings surprise of over 60%. The Moline, Illinois-based company would post year-over-year revenue growth of over 28% to $10.5 billion.

Deere’s better-than-expected results, which will be announced on Friday, would help the stock hit new all-time highs. Deere shares rose over 42% so far this year.

Deere & Company (DE) is one of the highest quality, most defensive names within the broader Machinery universe, given an historically lower cyclicality of Ag Equipment and history of strong management execution. FY21 should mark a tangible acceleration in the NA large ag replacement cycle, as commodity tailwinds are complemented by moderating trade headwinds and improving farmer sentiment,” noted Courtney Yakavonis, equity analyst at Morgan Stanley.

“With mgmt continuing to execute against its 15% mid-cycle operating margin target, we see continued momentum in DE’s margin improvement narrative – representing one of the most attractive idiosyncratic margin improvement narratives in the broader Machinery group.”

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE MAY 21

Ticker Company EPS Forecast
ROLL Rbc Bearings $1.05
DE Deere & Company $4.49
BKE Buckle $0.29
BAH Booz Allen Hamilton $0.84
VFC VF $0.28
FL Foot Locker $1.06

Target Could Hit New All-Time High on Strong Q1 Earnings

Target, one of the largest North American retailers offering customers both everyday essentials and fashionables, is expected to report its first-quarter earnings of $2.07 per share, which represents year-over-year growth of over 250% from $0.59 per share seen in the same period a year ago.

In the last four consecutive quarters, on average, the company has delivered an earnings surprise of over 60%. The Minneapolis, Minnesota-based company would post year-over-year revenue growth of over 9% to $21.51 billion.

Target’s better-than-expected results, which will be announced on May 19, would help the stock hit new all-time highs. Target shares traded over 1.3% higher at $211.34 on Friday. The stock rose over 19% so far this year.

Analyst Comments

“We raise 1Q21 EPS to $2.18E, ahead of Street’s $2.10 as we raise our comps estimate to+11.5%, and tweak margin assumptions. We now model comps +11.5%, yielding 2-year stack growth of +22.3%, accelerating sequentially by +30bps,” noted Oliver Chen, equity analyst at Cowen.

“We are ahead of Street’s+8.2% consensus estimate, and think our estimates could ultimately prove conservative as Target’s (TGT) category portfolio should see the retailer benefit from the stimulus, improving trends in apparel and other re-opening categories, along with continued strength in-home, which will more than offset normalizing food, essentials, and other category comps.”

Target Price Forecast

Seventeen analysts who offered stock ratings for Target in the last three months forecast the average price in 12 months of $215.81 with a high forecast of $260.00 and a low forecast of $170.00.

The average price target represents a 2.30% increase from the last price of $210.96. Of those 17 analysts, 13 rated “Buy”, four rated “Hold” while none rated “Sell”, according to Tipranks.

Morgan Stanley gave the base target price to $205 with a high of $260 under a bull scenario and $145 under the worst-case scenario. The firm gave an “Equal-weight” rating on the mass-market retail company’s stock.

Target (TGT) looks interesting for L-T investors, though it could be range-bound in the N-T. Potential topline upside in ’21 the most visible catalyst, but it is hard to get confident in this until wallet and market share reversals begin to play out in mid ’21,” noted Simeon Gutman, equity analyst at Morgan Stanley.

Several other analysts have also updated their stock outlook. Deutsche Bank raised the target price to $225 from $213. Telsey Advisory Group lifted the target price to $235 from $215. Jefferies upped the target price to $210 from $188. JP Morgan increased the target price to $233 from $230. UBS lifted the target price to $210 from $185.

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.

Check out FX Empire’s earnings calendar

Target Has Strong Upside Potential; Likely to Log Over 50% Jump in Q4 Profit

Target, one of the largest North American retailers offering customers both everyday essentials and fashionables, is expected to report a profit of $2.55 per share in the fourth quarter, which represents year-over-year growth of over 50% from $1.69 per share seen in the same quarter a year ago.

“We maintain our 4Q20 EPS estimate of $2.55 on comps +17.2%, in line with holiday sales, but could see upside on stimulus benefit in Jan. We model FY21 EPS of $8.96, +2% above Street. Target’s (TGT) ability to comp the comp will be the headline topic at its Investor Day, and management could conservatively guide FY21 comps and EPS to -LSD to -MSD,” said Oliver Chen, equity analyst at Cowen and Company.

“Fundamentally, we do believe TGT’s momentum is well-positioned to continue as consumers invest in home, appreciate TGT’s private brands, and take advantage of a myriad of convenient and innovative shopping modalities including Drive-Up; furthermore, the backdrop of stimulus payments and a high savings rate are strong positives.”

In the last four consecutive quarters, on average, the company has delivered an earnings surprise of 60%. The Minneapolis, Minnesota-based company would post year-over-year revenue growth of over 17% to $27.419 billion.

Target shares, which surged over 37% in 2020 and added another 6% so far this year, traded about 2% higher at $186.51 on Monday.

Target Stock Price Forecast

Twelve analysts who offered stock ratings for Target in the last three months forecast the average price in 12 months of $216.33 with a high forecast of $235.00 and a low forecast of $195.00.

The average price target represents a 16.35% increase from the last price of $185.93. From those 12 analysts, 10 rated “Buy”, two rated “Hold” and none rated “Sell”, according to Tipranks.

Morgan Stanley gave the base target price of $195 with a high of $250 under a bull scenario and $135 under the worst-case scenario. The firm gave an “Equal-weight” rating on the mass-market retail company’s stock.

“We like Target (TGT) and believe its positioning post-COVID-19 is among the best across Retail. We are equal weight rated as valuation seems fair against Street estimates that also seem reasonable. As highlighted in our 2021 Outlook, we could be more constructive on TGT if we could more comfortably get to an $11 2022 EPS scenario. We think bullish ’21 EPS estimates are in the $10-$10.50 range followed by something similar and/or modest growth in ’22. Getting to $11 by ’22 is not unrealistic as it would take 3%-4% comps in each of the next two years,” said Simeon Gutman, equity analyst at Morgan Stanley.

“This top-line growth seems a bit optimistic though and assumes TGT retains nearly 100% of its 2020 market share gains. As we look for ways to get more constructive, we thought valuing Shipt offers an interesting angle with “hidden” asset value. As discussed below, we think Shipt could be worth ~$7b and have reflected this in our updated bull case. Our TGT bull/bear case spread now tilts positively and as we learn more about this asset, we will consider incorporating it into our base case.”

Several other analysts have also updated their stock outlook. BofA Global Research raised the price objective to $260 from $225. Stifel upgraded to buy from hold and upped the target price to $225 from $200. Target had its price objective boosted by Telsey Advisory Group to $225 from $190. The brokerage currently has an outperform rating on the retailer’s stock.

Moreover, Raymond James upped their price objective to $200 from $180 and gave the stock a strong-buy rating. Argus upgraded Target from a hold rating to a buy rating and set a $205 price target on the stock.

Analyst Comments

TGT comped +17.2% in November and December and we believe trends accelerated in January driven by the stimulus. Hence, we expect TGT to print a high teens comp in Q4 with EPS in the $2.50-$3 range, vs consensus at +16% comps and $2.54 in EPS. Similar to other COVID environment beneficiaries, a Q4 beat is unlikely to change the debate as investors are focused on ’21 guidance,” Morgan Stanley’s Gutman added.

“We expect TGT to guide to slightly negative to flat comps for ’21 and EPS between $9 and $10 (vs. the Street at -3.5% comps and EPS of $8.78), including gross margin expansion as mix normalizes and modest SG&A deleverage on lower sales growth. Bulls are likely looking for a flat to LSD comp guide and ’21 EPS in the $10 – $10.50 range, which would require SG&A leverage in addition to gross margin expansion.”

Check out FX Empire’s earnings calendar

Three Top Earnings Plays This Week

Major benchmarks sold off last week in reaction to wild action in the normally sedate bond market. Bonds recovered a good portion of weekly losses on Friday but broad volatility took its toll, dropping the SP-500 and Nasdaq-100 to weekly lows. Many popular names entered corrections during the rout, predicting weakness well into the second quarter. Expect the new week to start with bears pressing their bets and attempting to push prices to even lower levels.

Zoom Video Communication Inc. (ZM) steps to the earnings plate on Monday, with the stock struggling after shareholders picked up stakes and moved on to COVID recovery plays. Big box retailers highlight the week’s other big releases, led by Target Inc. (TGT) on Tuesday and Costco Wholesale Corp. (COST) on Thursday. COST has entered a correction after posting strong 2020 returns while TGT is caught in a trading range near January’s all-time high.

Target

Wall Street expects Target to post a profit of $2.54 per-share on $27.4 billion in revenue. If met, earnings-per-share (EPS) will mark an impressive 50% profit increase compared to the same quarter last year. The company consistently beat estimates in 2020, forcing analysts to raise price targets several times. The stock has now pulled back to support at the 50-day moving average and is perfectly positioned for a multiday bounce in reaction to another strong quarter.

Costco

Costco consensus predicts earnings of $2.31 per-share on $42.7 billion in revenue. If met, EPS will mark a 10% profit increase compared to the same quarter last year. A strong uptrend stalled above 380 in October, yielding two slightly higher highs, followed by a head and shoulders breakdown in January. The stock is now trading below the 200-day moving average for the first time since April 2020 and is rapidly approaching the H&S measured move target near 320.

Zoom Video Communications

Zoom will beat earnings posted in the same quarter last year but it won’t mean much because the period doesn’t include the pandemic. The stock has lost its luster since Pfizer Inc. (PFE) vaccine results triggered a massive rotation out of COVID beneficiaries and into recovery plays. The company has released new products to an attempt to diversify its revenue stream but is still working off massively overbought technical readings in reaction to its historic rally.

For a look at all of this week’s economic events, check out our economic calendar.

Disclosure: the author held no positions in aforementioned securities at the time of publication. 

Earnings to Watch Next Week: Zoom, Target, Dollar Tree and Costco in Focus

Earnings Calendar For The Week Of March 1

Monday (March 1)

IN THE SPOTLIGHT: ZOOM

Zoom Video Communications Inc is expected to report a profit of $0.79 per share in the fourth quarter, which represents year-over-year growth of over 425% from $0.15 per share seen in the same quarter a year ago.

The company, which provides videotelephony and online chat services through a cloud-based peer-to-peer software platform, would post year-over-year revenue growth of over 330% to $811.77 million.

“As work-from-home (WFH) persists and Zoom (ZM) Phone gains traction, ZM appears to set up for a strong FQ4 print. More than FQ4/FQ1 report/guide, investor focus/reaction likely based on whether co guides full FY22. Would view the full-year guide as a pos NT catalyst given cautious investor sentiment, however, remain Equal-weight given 2H comps,” noted Meta A Marshall, an equity analyst at Morgan Stanley.

Zoom has established its position as the newly emerged leader in video conferencing, now a growth market, largely credible to the company itself given an introduction of a solution that employees actually use. The company has a meaningful competitive moat built on more than just architecture, but a rapid uptick in video usage has attracted significant investment efforts from competitors. Position within customers makes an attractive opportunity to expand into the broader UC market. Early wins encouraging. Environment post-COVID-19 and large-scale WFH, and timing to reach, less certain.”

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE MARCH 1

Ticker Company EPS Forecast
BNZL Bunzl £71.65
FMX Fomento Economico Mexicano Sab $14.49
XRAY Dentsply International $0.64
PRGO Perrigo $1.01
TGNA Tegna $1.13
AXSM Axsome Therapeutics Inc -$0.75
EVTC Evertec $0.55
THRM Gentherm $0.65
BZLFY Bunzl plc $0.13
NRG NRG Energy $0.45
MIDD Middleby $1.40
AY Atlantica Yield $0.23
ZM Zoom Video Communications $0.79
NVAX Novavax -$1.78
TTEC TeleTech $0.71
AMRC Ameresco $0.29
IPAR Inter Parfums $0.30
NSTG NanoString Technologies -$0.50
AI Arlington Asset Investment -$0.19
CCXI ChemoCentryx -$0.33
CYRX Cryoport Inc -$0.05
SGMS Scientific Games -$0.44
DDD 3D Systems $0.09
SRPT Sarepta Therapeutics -$1.80
NGHC National General $0.73
SRNE Sorrento Therape -$0.23
JD JD.com $0.22
AIV Apartment $0.01
PKX Posco $1.52
BKRKY Bank Rakyat $0.13
OSH Oak Street Health -$0.25
YALA Yalla $0.12
KHOLY Koc Holdings AS $0.55
DM Dominion Midstream Partners -$0.06
CXO Concho Resources $1.18
MNTA Momenta Pharmaceuticals -$0.50
PE Parsley Energy $0.25
BEAT BioTelemetry $0.48

 

Tuesday (March 2)

IN THE SPOTLIGHT: TARGET

The eighth-largest retailer in the United States is expected to report a profit of $2.55 per share in the fourth quarter, which represents year-over-year growth of over 50% from $1.69 per share seen in the same quarter a year ago. In the last four consecutive quarters, on average, the company has delivered an earnings surprise of 60%.

The Minneapolis, Minnesota-based company would post year-over-year revenue growth of over 17% to $27.419 billion.

“We maintain our 4Q20 EPS estimate of $2.55 on comps +17.2%, in line with holiday sales, but could see upside on stimulus benefit in Jan. We model FY21 EPS of $8.96, +2% above Street. TGT’s ability to comp the comp will be the headline topic at its Investor Day, and management could conservatively guide FY21 comps and EPS to -LSD to -MSD,” said Oliver Chen, equity analyst at Cowen and Company.

“Fundamentally, we do believe TGT’s momentum is well-positioned to continue as consumers invest in home, appreciate TGT’s private brands, and take advantage of a myriad of convenient and innovative shopping modalities including Drive-Up; furthermore, the backdrop of stimulus payments and a high savings rate are strong positives.”

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE MARCH 2

Ticker Company EPS Forecast
SYDB Sydbank A/S kr3.14
CRDA Croda International £84.78
TW Taylor Wimpey £17.00
WEIR Weir Group £43.79
TPK Travis Perkins £43.60
ROR Rotork £6.25
TGT Target $2.55
AZO AutoZone $12.80
KSS Kohl’s $0.99
AER AerCap $0.94
AMRS Amyris -$0.12
SE Spectra Energy -$0.55
DAR Darling Ingredients $0.38
QTRX Quanterix -$0.33
VEEV Veeva Systems $0.68
ROST Ross Stores $1.00
HPE Hewlett Packard $0.41
JWN Nordstrom $0.13
AMBA Ambarella $0.08
GO Grocery Outlet Holding Corp $0.23
URBN Urban Outfitters $0.28
BOX BOX $0.17
ALLK Allakos -$0.85
AHT Ashtead Group £0.29
EDEN Edenred €0.65
ITRK Intertek Group £83.44
IGT International Game Technology $0.04
EMG Man Group £0.07
MSNFY Minera Frisco ADR $0.03
AVAV AeroVironment $0.01
TGTX TG Therapeutics -$0.57

 

Wednesday (March 3)

IN THE SPOTLIGHT: DOLLAR TREE

Chesapeake, Virginia-based discount variety stores that sells items for $1 or less is expected to report a profit of $2.12 per share in the fiscal fourth quarter, which represents year-over-year growth of over 18% from $1.79 per share seen in the same quarter a year ago.

In the last four consecutive quarters, on average, the company has delivered an earnings surprise of over 14%.

The Fortune 500 company, which operates 15,115 stores throughout the 48 contiguous U.S. states and Canada, would post year-over-year revenue growth of over 7% to $6,774 million.

Dollar Tree’s namesake banner has a long history of strong performance, enabled by its differentiated value proposition, but its Family Dollar unit has struggled to generate top-line and margin growth since it was acquired in 2015. We suspect the Dollar Tree banner is better-positioned long-term, but do not believe the aggregated firm benefits from a durable competitive edge, as competitive pressure in a fast-changing retail environment amid minimal switching costs limits results. We expect the COVID-19 pandemic’s effects to be confined to the near term, leaving the long-term competitive dynamic intact,” said Zain Akbari, equity analyst at Morningstar.

“We expect comparable sales gains in the mid-single digits for the Dollar Tree banner and high-single-digits for Family Dollar in the fourth quarter, as rising infection rates led customers to stock up with a focus on essentials and value. Cost leverage should drive the quarter’s operating margin higher by nearly 100 basis points (to 10%) versus the same period in fiscal 2019. We expect sales to normalize in 2021as vaccines gradually contain the pandemic.”

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE MARCH 3

Ticker Company EPS Forecast
DLTR Dollar Tree $2.12
WEN Wendy’s $0.18
TAC TransAlta USA -$0.07
PDCO Patterson Companies $0.51
DY Dycom Industries $0.04
MRVL Marvell Technology $0.29
SNOW Intrawest Resorts -$0.17
SPLK Splunk $0.03
AEO American Eagle Outfitters $0.36
SQM Sociedad Quimica Y Minera De Chile $0.22
TCOM Trip.com Group Ltd $0.28
YEXT Yext Inc. -$0.08
MTLS Materialise $0.01
CPB Campbell Soup $0.83
NAV Navistar International -$0.02
VNET 21Vianet $0.05
ABM ABM Industries $0.58

 

Thursday (March 4)

IN THE SPOTLIGHT: COSTCO WHOLESALE

The largest wholesale club operator in the U.S. is expected to report a profit of $2.44 in the fiscal second quarter, which represents year-over-year growth of over 16% from $2.10 per share seen in the same quarter a year ago.

In the last four consecutive quarters, on average, the company has delivered an earnings surprise of 8.8%.

COST’s results have consistently been among the best in Retail. Over the past decade, COST has delivered 6% comps and 10% EBIT growth on average. It is rare to find a business with COST’s solid comp/membership growth, while relative e-commerce insulation differentiates its value proposition from other retailers,” said Simeon Gutman, equity analyst at Morgan Stanley.

“We are Overweight even as the stock trades at an elevated valuation given COST’s scarcity value, safety, and scale. In the near-term, we expect incremental sales uplifts from COVID-19 disruption, and earnings power looks stronger despite COVID-19 expenses.”

TAKE A LOOK AT OUR EARNINGS CALENDAR FOR THE FULL RELEASES FOR THE MARCH 4

Ticker Company EPS Forecast
KR Kroger $0.69
TTC Toro $0.74
BJ BJs Wholesale Club Holdings Inc $0.67
BZUN Buzzi Unicem RSP $3.55
BURL Burlington Stores $2.11
CIEN Ciena $0.45
MIK Michaels Companies $1.41
JAMF Jamf $0.01
AVGO Avago Technologies $6.56
MDLA Medallia, Inc. -$0.01
GWRE Guidewire Software -$0.01
COO Cooper Companies $2.77
GPS Gap $0.19
COST Costco Wholesale $2.44
GOL Gol Linhas Aereas Inteligentes -$0.41
ALXO Alx Oncology Holdings Inc. -$0.36
AUOTY AU Optronics $0.31
TOELY Tokyo Electron Ltd PK $0.80
FIZZ National Beverage $0.33
CMD Cantel Medical Corp $0.49
PHI Philippine Long Distance Telephone $0.63
MBT Mobile TeleSystems OJSC $17.30
CNQ Canadian Natural Resource USA $0.10

 

Friday (March 5)

Ticker Company EPS Forecast
BIG Big Lots $2.50

 

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.

Three Retailers Trading At All-Time Highs

Wall Street analysts expect a strong 2020 holiday season despite the pandemic, with e-commerce sales continuing their torrid growth pace. Many brick and mortar retailers should outperform as well because well-constructed online sales portal will add to modest in-store purchases. However, storefronts without a strong internet presence are likely to flounder, with the growing infection rate keeping many customers out of virus-ridden closed ventilation systems.

Let’s look at three hybrid retailers hitting all-time highs as we get closer to the holidays and year’s end. These are big cap companies that have adapted well to the age of the Internet, with an expanding customer base utilizing curbside pick-up and package delivery as well as physical shopping trips. Of course, this is the ‘new normal’, with retailers that waited too long to open or expand online sales, like America’s struggling mall anchors, having a tough time paying the bills.

Walmart

Dow component Walmart Inc. (WMT) waited until 2016 to get in the e-commerce game, buying Jet.com for a hefty premium. They’ve now combined that operation into a robust site that’s emerged as the primary competitor to Amazon.com Inc. (AMZN). The company has also launched a membership program to rival Prime, setting the stage for an epoch retail battle. In the meantime, the stock is trading just five points below November’s all-time high while holding onto a 26% year-to-date return.

Target

Target Corp. (TGT) has emerged as 2020’s top retail performer, taking market share from equal-sized and smaller rivals during the first quarter’s pandemic decline. The company blew away Q3 2020 estimates in November, picking up additional market share through strong execution. Same day and drive-up sales exploded during the quarter, growing 200% and 500% year-over-year, respectively. As the company noted, customers have shifted spending from travel into the goods they sell, raising odds for continued strong growth in 2021.

TJX

TJX Companies Inc. (TJX) sells home basics, apparel, and home fashions through T.J. Maxx, Marshalls, Homesense, and Sierra stores. This ‘off-price’ operation provides a less robust online sales portal than Walmart or Target and has no curbside pick-up. However, it executes so well that investors keep buying the stock, which is trading less than one point under an all-time high. Even so, this issue will carry greater downside risk through the winter months due to the surging pandemic.

For a look at all of today’s economic events, check out our economic calendar.

Disclosure: the author held no positions in aforementioned securities at the time of publication.

Target Shares Soar After Blowout Quarterly Earnings

Target Corporation (TGT) soared 12.65% Wednesday after the big-box retailer smashed Wall Street’s quarterly earnings and revenue forecasts. The company reported Q2 adjusted earnings of $3.38 per share, more than double analysts’ estimates of $1.64 a share. The top line grew 86% from a year earlier due to customers continuing to shop close to home during the coronavirus pandemic.

Sales of $22.98 billion topped expectations by 13.54% and grew 25% from the year-ago period as the company benefited from its designation as an essential retailer during U.S. lockdowns that forced some of its smaller rivals to close. “In the current environment, each of our categories is operating very well,”  CEO Brian Cornell said during the earnings call, per MarketWatch. He added that the company picked up $5 billion in market share in the quarter as several competitors filed for bankruptcy and laid off staff.

Through Wednesday’s close, Target stock has a market capitalization of $77.11 billion, offers a 1.99% dividend yield, and trades 25.76% over the past three months as of Aug. 20, 2020. Year to date (YTD), the shares have gained nearly 22%.

Digit Sales Growth

Target’s e-commerce sales registered a 195% increase during the quarter, propelled by more than 700% growth in its curbside pickup service. Meanwhile, the company’s Shipt online delivery service rocketed by 350% year over year (YoY). The retailer also said it added 10 million new digital customers in the first half of the year.

Wall Street View

Most analysts remain bullish as sales continue to show strength in the fragmented retail space. The stock receives 15 ‘Buy’ ratings, 2 ‘Overweight’ ratings, 9 ‘Hold’ ratings, and just 2 ‘Sell’ ratings. Price targets range from as high as $180 to as low as $105, with the median price pegged at $152 – 1.4% below Wednesday’s $154.22 close.

Technical Outlook and Trading Tactics

Target shares catapulted above the psychological $150 level after the company delivered its better-than-expected results. The move was accompanied by the largest volume in twelve months, indicating buyer conviction. Active traders who enter the stock at these levels should consider using a trailing bar stop to book profits. To use this strategy, remain in the position until the price closes beneath the current day’s low or the prior day’s low – whichever is lower. Conservative traders may opt to wait for a retracement to previous resistance at $130, which has now flipped to support.