What Analysts Are Saying About Target After Earnings

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Target Corp. (NYSE: TGT) released its fiscal third-quarter earnings report before the markets opened on Wednesday. Overall the stock made solid gains on Wednesday after the earnings report, keeping itself in line with the broad markets. Analysts may have mixed views on this stock, but across the board they raised their price targets.

24/7 Wall St. has included some highlights from the earnings report, as well as what analysts are saying after the fact.

Target posted $1.04 in earnings per share (EPS) and $16.44 billion in revenue, versus consensus estimates from Thomson Reuters of $0.83 in EPS and revenue of $16.30 billion. The same period of last year reportedly had EPS of $0.86 and $17.61 billion in revenue.

Net sales in this quarter also reflected a decrease in comparable sales of 0.2%. Comparable digital channel sales grew 26% and contributed 0.7 percentage points to comparable sales growth.

In terms of guidance for the fourth quarter, the company expects to see sales growth in the range of −1% to 1% and EPS between $1.55 and $1.75. The consensus estimates are $20.86 billion in net revenues and $1.60 in EPS.

Merrill Lynch reiterated a Buy rating for Target with a $90 price objective. The firm also detailed in its report:

Valuation compelling, still trades at discount to Walmart– Target’s shares are trading at just 14-times 2 year forward P/E and could trade more in-line with Walmart at 15- to 16-times if Target’s comps reaccelerate against easy comparisons in the first half of 2018. Target also looks attractive on a Discounted Cash Flow basis, with our $90 price objective based on 8% to 9% expected return assumption and a 7.5-times terminal EBITDA multiple. Target’s improved (11%+) return on invested capital and healthy dividend yield (now 3.4%) also supports a higher valuation, in our view.

Merrill Lynch gave its investment rationale as:

We rate Target shares Buy as we believe the company should benefit from an improving midcycle backdrop given its middle-income core customer base and given our view that Target’s new efforts to turnaround its U.S. business are showing early positive results.

A few other analysts weighed in on Target after the earnings report:

  • BMO Capital Markets raised its price target to $81 from $79.
  • Goldman Sachs raised its price target to $77 from $71.
  • JPMorgan raised its price target to $79 from $72.
  • Deutsche Bank has a Hold rating and raised its price target to $75 from $71.
  • Telsey Advisory Group has an Outperform rating and raised its target to $84 from $82.
  • Jefferies has a Hold rating and raised its price target to $75 from $72.
  • Cowen has a Market Perform rating and raised its price target to $75 from $68.

Shares of Target were last seen down 0.7% at $75.47 on Thursday. The stock has a consensus analyst price target of $75.89, and the 52-week trading range is $65.50 to $84.14.