Target Shares Soar After Blowout Quarterly Earnings

Target Corporation (TGT) soared 12.65% Wednesday after the big-box retailer smashed Wall Street’s quarterly earnings and revenue forecasts. The company reported Q2 adjusted earnings of $3.38 per share, more than double analysts’ estimates of $1.64 a share. The top line grew 86% from a year earlier due to customers continuing to shop close to home during the coronavirus pandemic.

Sales of $22.98 billion topped expectations by 13.54% and grew 25% from the year-ago period as the company benefited from its designation as an essential retailer during U.S. lockdowns that forced some of its smaller rivals to close. “In the current environment, each of our categories is operating very well,”  CEO Brian Cornell said during the earnings call, per MarketWatch. He added that the company picked up $5 billion in market share in the quarter as several competitors filed for bankruptcy and laid off staff.

Through Wednesday’s close, Target stock has a market capitalization of $77.11 billion, offers a 1.99% dividend yield, and trades 25.76% over the past three months as of Aug. 20, 2020. Year to date (YTD), the shares have gained nearly 22%.

Digit Sales Growth

Target’s e-commerce sales registered a 195% increase during the quarter, propelled by more than 700% growth in its curbside pickup service. Meanwhile, the company’s Shipt online delivery service rocketed by 350% year over year (YoY). The retailer also said it added 10 million new digital customers in the first half of the year.

Wall Street View

Most analysts remain bullish as sales continue to show strength in the fragmented retail space. The stock receives 15 ‘Buy’ ratings, 2 ‘Overweight’ ratings, 9 ‘Hold’ ratings, and just 2 ‘Sell’ ratings. Price targets range from as high as $180 to as low as $105, with the median price pegged at $152 – 1.4% below Wednesday’s $154.22 close.

Technical Outlook and Trading Tactics

Target shares catapulted above the psychological $150 level after the company delivered its better-than-expected results. The move was accompanied by the largest volume in twelve months, indicating buyer conviction. Active traders who enter the stock at these levels should consider using a trailing bar stop to book profits. To use this strategy, remain in the position until the price closes beneath the current day’s low or the prior day’s low – whichever is lower. Conservative traders may opt to wait for a retracement to previous resistance at $130, which has now flipped to support.