Market Overview

Can Target Deliver 42% YOY Earnings Growth On Flat Revenue?

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Target Corporation (NYSE: TGT) is scheduled to report earnings on Wednesday morning, before the market opens.

The company guided a year-over-year increase of more than 42 percent in earnings, from $0.70 per share registered in the first quarter of last year, to $1.00 per share expected this quarter. The Street is more confident and models consensus earnings of $1.03 per share on revenue of $17.073 billion. The crowd is even more bullish, and projects earnings $1.04 per share on revenue of $17.223 billion.

Revenue for the first quarter of 2014 came in at $17.5 billion.

But with such an irregular history, will the company be able to meet or beat estimates?

The Street’s expectations rose considerably as earnings got closer. Guidance and the crowd remained pretty much flat.

Why Expect Strong Results?

In a report issued last week, analysts at MKM Partners previewed Target’s results, reiterating a Neutral rating and an $80 price target. They expect robust results this quarter, “driven by a good response to its Lilly Pulitzer limited-time offering in mid-April,” a recent article explains. “The company may beat its EPS guidance of $1.01 with EBIT margin of 6.9 percent, up 50bps from 1Q14, but down 60bps from 1Q13.”

“We look for only slight square footage growth (only six general merchandise stores planned) (…) [and] a gradual improvement in performance in food (20% of sales), driven by new leadership (veteran grocer Anne Dament joined in April) and a more differentiated mix (more organic, more premium, healthier),” they conclude.

Latest Ratings for TGT

DateFirmActionFromTo
Mar 2019Evercore ISI GroupInitiates Coverage OnIn-Line
Mar 2019Deutsche BankMaintainsHoldHold
Mar 2019BMO CapitalMaintainsMarket PerformMarket Perform

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Posted-In: Estimize MKM PartnersAnalyst Color Previews Analyst Ratings Trading Ideas

 

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