Reasons to Be Worried About Target

According to Brian Sozzi, CEO and Chief Equities Strategist of Belus Capital Advisors, it is ultimately the revised non-GAAP earnings guidance, which captures the very core performance of the business, that should be of worry to Target investors. Mr. Sozzi states that Target's operations in both the U.S. and Canada are essentially underwhelming its own cautious view, and the new commentary is highly inconsistent with what was offered from interim chief executive officer John Mulligan and chief merchandising and supply chain officer Kathryn Tesija on May 21. At the time, Target suggested to investors that the U.S. business was beginning to turn the corner from the holiday data breach amid investments in promotions ad marketing, while Canada was on the mend as excess inventory was cleared through aggressive discounts and supply chain hiccups were being corrected. The latest developments from Target and the stock's 4.4% decline on Tuesday's session hint that the market is still trying to properly value a business that is now consistently underperforming guidance. In light of the lagging nature of Target's fundamentals and the material overhang of a data breach payout, there is reason to believe the company's stock price faces significant risks in the months ahead. According to Mr. Sozzi, some of the risk factors include: First, the share repurchase plan could continue to be halted Second, a dividend payout could be reduced Third, the company's credit rating could be lowered again