Target Corp to Benefit From Back-To-School Sales; Stocks Could Hit New Highs
Target Corp, one of the largest North American retailers offering customers both everyday essentials and fashionables, is expected to report its second-quarter earnings of $3.49 per share, which represents year-over-year growth of over 3% from $3.38 per share seen in the same period a year ago.
In the last four consecutive quarters, on average, the company has delivered an earnings surprise of over 69%. The Minneapolis, Minnesota-based company would post year-over-year revenue growth of over 8% to $24.84 billion.
Target Corp shares have gained about 50% so far this year. The stocks ended 0.61% higher at $263.15 on Monday. Wednesday’s better-than-expected results could help the stock hit new all-time highs.
On the other hand, the Bentonville, Arkansas-based retailer Walmart is expected to report its second-quarter earnings of $1.56 per share same as a year ago. However, the multinational retail corporation that operates a chain of hypermarkets’ revenue would decline over 1% to $135.9 billion. On average, the retail giant has beaten earnings estimates by over 17% in the last four quarters.
“Walmart (WMT) & Target Corp (TGT) likely to print upside given strong comp sales trends, a healthy consumer bolstered by child tax credits, & one of the best back to school seasons in retail. We prefer TGT given prospects of a greater beat and a lower relative valuation. We also enclose: Cowen’s Target x ULTA analysis, & our online grocery survey highlights WMT’s momentum. Raise TGT price target to $300 & maintain WMT’s $170 price target,” noted Oliver Chen, equity analyst at Cowen.
“We are bullish on the back-to-school market share opportunity, and expect outsized growth at both. Both are well-positioned as their multi-category portfolios should result in benefits across apparel, electronics, school supplies, home, and other categories. That being said, we ultimately give the edge to TGT given its stronger apparel and home assortment, and overall mix of total sales towards these categories.”
Target Corp Stock Price Forecast
Eighteen analysts who offered stock ratings for Target Corp in the last three months forecast the average price in 12 months of $260.76 with a high forecast of $305.00 and a low forecast of $216.00.
The average price target represents a -0.91% change from the last price of $263.15. From those 18 analysts, 14 rated “Buy”, four rated “Hold” while none rated “Sell”, according to Tipranks.
Morgan Stanley gave the base target price of $250 with a high of $290 under a bull scenario and $180 under the worst-case scenario. The firm gave an “Equal-weight” rating on the big-box retailer’s stock.
“Target Corp (TGT) has firmly established itself as a winner in Retail and deserves a premium multiple vs. historical valuations. TGT is gaining market share on top of 2020’s wallet share gains, we think TGT is one of the more attractive ways to play the upside to GDP. We see a positive risk/reward skew in the N-T but results could moderate and the stock path may be uneven, keeping us Equal-weight,” noted Simeon Gutman, equity analyst at Morgan Stanley.
Several other analysts have also updated their stock outlook. Telsey Advisory Group raised the stock price forecast to $305 from $265. Deutsche Bank lifted the price target to $305 from $258. JPMorgan upped the target price to $280 from $260.
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