Sozzi Suggests The Street Has Been Hit By An Epidemic Of 'Target Fever' - Target (NYSE:TGT)

In a note released Tuesday, Belus Capital Advisors' Brian Sozzi asks, “Why does Wall Street have Target fever?” Sozzi is puzzled by the 0.76 percent increase in Target

TGT

shares since the disclosure of what he is calling “Hackergate” - the holiday shopping-season incident in which as many as 70 million customers were victim to unauthorized access to their credit and debit card information. The Belus Capital manager seems equally bewildered by the analyst response to Target's disclosure. He lays out several symptoms which many Wall Street analysts seem to be displaying:

Nervous anticipation that “better than expected” holiday sales in the U.S. before HackerGate is an indication of a strong core business;
Viewing diminishing net losses in Canada as a positive, forgetting that the business is still generating net losses and lacking any sign of reaching relevancy in a market dominated by Wal-Mart;
Ignores the elevated probability that Target issues a very disappointing initial EPS guidance range for FY14 even if U.S. sales stabilize by mid-February; and
Is not mildly concerned by a recent announcement to close 8 U.S. stores by May 2, 2014.

Despite Target's many attempts to rebuild relationships, Sozzi believes there can be no assurance affected consumers will return, and notes the cost of rebuilding these relationships suggests a less aggressive move than has been presented to investors. In line with Sozzi's analysis, Belus Capital maintains a Sell rating and adjusted the price target from $60 to $57. Target is currently trading at $61.56, down about 1.5 percent during this week.

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