Why Analysts Are Calling for Target to Hit Even Higher Highs

After Target Corp. (NYSE: TGT) released its fiscal third-quarter financial results early on Wednesday, shares hit all-time highs, continuing what has been a phenomenal year for this retailer. Analysts were also quick to adjust their targets following these results, calling for even higher highs for this big-box retailer.

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

In terms of the results, Target said that it had $1.36 in earnings per share (EPS) and $18.7 billion in revenue. That compares with consensus estimates of $1.19 in EPS and $18.49 billion in revenue. The same period of last year reportedly had $1.09 in EPS and $17.82 billion in revenue.

During the quarter, comparable sales grew 4.5%, driven by a 3.1% increase in comparable traffic. Comparable digital sales grew 31% — on top of 49% last year. Third-quarter comparable sales growth reflects 2.8% growth in stores and a 1.7 percentage point contribution from digital sales.

Looking ahead to the fiscal fourth quarter, the company expects to see EPS in the range of $1.54 to $1.74 and comparable sales growth of 3% to 4%. Consensus estimates call for $1.65 in EPS and $23.84 billion in revenue for the quarter.

Credit Suisse reiterated an Outperform rating for Target and raised its price target to $138 from $112. In its report, the brokerage firm detailed:

Broad-based growth across channels, helped margins also; multiple profit drivers; and says Buybacks continue add some support: Target’s much stronger Q3 supports the market share momentum and margin inflection story we have been playing for. While there were certainly some benefits unique to Q3 (e.g. sales mix, lapping big supply chain costs), the underlying trends are among the best in retail, in terms of balanced sales growth, relative sales performance to peers, and margin improvement while growing online aggressively and investing.

Here’s what a few other analysts had to say:

  • Raymond James reiterated a Strong Buy rating and raised its target to $150 from $130.
  • Goldman Sachs reiterated a Buy rating and raised its target price to $133 from $120.
  • Baird reiterated an Outperform rating and raised its price target from $115 to $140.
  • Telsey Advisory reiterated it as Outperform but raised its price target to $137 from $120.
  • KeyBanc reiterated an Overweight rating and raised its price target from $130 to $140.
  • Merrill Lynch reiterated a Buy rating and raised its price objective to $150 from $125.

Shares of Target traded up about 1% on Thursday, at $127.64 in a 52-week range of $60.15 to $127.95. The consensus price target is $126.93.