Why 5 Target Analysts Are Maintaining Ratings Following Q4 Results

Zinger Key Points
  • Although Target delivered an earnings beat, it’s gross margins were weaker, one analyst said.
  • Improvement in the company’s earnings in 2023 may be muted, due to the challenging economic backdrop, another analyst stated.

Shares of Target Corporation TGT declined sharply in early trading on Wednesday, despite the company reporting an earnings beat for its fourth quarter.

KeyBanc Capital Markets On Target

Analyst Bradley Thomas maintained an Overweight rating and price target of $180.

Although the fourth-quarter results were better than expectations, the initial 2023 guidance “reflects a cautious view, as TGT’s discretionary business continues to face consumer headwinds,” Thomas said in a note.

“While earnings should improve significantly in 2023, the rate of improvement could be muted by the challenging economic backdrop,” he added.

BMO Capital Markets On Target

Analyst Kelly Bania reiterated a Market Perform rating and price target of $165.

“Target's F4Q23 EPS beat on better sales and expense management but weaker gross margins,” Bania wrote in a note.

“2023 guidance fell below expectations, but as expected, investors are clearly looking toward 2024 where expectations roughly aligned with TGT's outlook that a return to 6%+ EBIT% could come as soon as 2024,” she further stated.

Check out other analyst stock ratings.

Telsey Advisory Group On Target

Analyst Joseph Feldman reaffirmed an Outperform rating and price target of $185.

“Target’s investor meeting increased our confidence in the company’s ability to remain relevant to consumers, gain market share, improve the operating margin over time, and generate strong earnings growth,” Feldman said.

“Target's margin recovery (improvement) opportunity is significant in 2023 and beyond,” the analyst wrote. “In fact, Target expects operating income to grow double digits (over $1B) in 2023,” he added.

Guggenheim Securities On Target

Analyst Robert Drbul maintained a Buy rating and price target of $200.

“Comparable store sales grew 0.7%, also above our estimate of (2.0)% decline, driven entirely by guest traffic,” Drbul said. “Notably, while total inventory levels at Target decreased 3% YoY (despite an increase in early receipts), inventories in discretionary categories fell 13% YoY,” the analyst further mentioned.

“Despite TGT's prudent inventory actions in 2022 as well as our expectations of freight and transportation cost easing, we further reduce our FY23 EPS estimate to $8.35 (from $9.00) as we now expect softer discretionary sales, higher inventory shrink, and continued promotional intensity,” he added.

Morgan Stanley On Target

Analyst Simeon Gutman reiterated an Equal-Weight rating, while raising the price target from $155 to $165.

“We think TGT is entering the year in a relatively clean inventory position alongside a cautious view on the discretionary spending outlook,” Gutman wrote in a note. “However, there remains some ambiguity over the ultimate magnitude and drivers of margin recapture,” he added.

TGT Price Action: Shares of Target had declined by 4.04% to $161.66 at the time of publication Wednesday.

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Posted In: Analyst ColorEarningsNewsPrice TargetReiterationAnalyst RatingsMoversTrading IdeasBMO Capital MarketsBradley ThomasGuggenheim SecuritiesJoseph FeldmanKelly BaniaKeyBanc Capital MarketsMorgan StanleyRobert DrbulSimeon GutmanTelsey Advisory Group
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