Stryker shares tumble despite strong Q2 results and raised guidance
On Thursday, CFRA analyst Arun Sundaram revised the 12-month price target for Target Corporation (NYSE:TGT) stock, decreasing it slightly from $100.00 to $99.00, while maintaining a Hold rating on the shares. Currently trading at $93.01 with a P/E ratio of 10.78, InvestingPro analysis suggests Target is undervalued relative to its Fair Value. Sundaram explained the adjustment, noting a modest reduction in the target to $99, which is based on 12 times the firm’s fiscal year 2027 (ending in January) earnings per share (EPS) estimate of $8.22. This EPS estimate has been raised from the previous $7.69, reflecting a shift in tariff containment to fiscal year 2026.
The analyst also reduced the EPS estimate for fiscal year 2026 to $7.07 from $7.12, citing the valuation multiple as a significant discount to historical averages of 16 times earnings and to the multiples of broadline retail peers. This aligns with InvestingPro data showing 15 analysts have revised their earnings downward for the upcoming period. Sundaram pointed out that Target’s first-quarter results, which cover April, were underwhelming, especially with comparable sales dropping 3.8% year-over-year following three consecutive quarters of growth, contributing to the stock’s significant YTD decline of 29.82%.
Target has also revised its full-year EPS guidance downward to a range of $7.00 to $9.00, from the previously projected $8.80 to $9.80. Sundaram sees a greater risk of downside to this new forecast, considering the weak sales trends, an 11% year-over-year increase in inventory, and the potential necessity for further price reductions to boost store traffic.
Despite these challenges, the analyst suggests that the outlook for the second half of the year could be more promising, with easier comparisons and the likelihood that markdowns related to inventory will be confined to the second quarter. Sundaram also mentioned that any macroeconomic developments, such as trade deals or tariff relief, could provide a tailwind for Target, as approximately half of the company’s merchandise is imported. Notably, InvestingPro data reveals Target’s strong dividend history, having raised dividends for 54 consecutive years, with a current yield of 4.82%. For deeper insights into Target’s financial health and growth potential, access the comprehensive Pro Research Report available on InvestingPro.
In other recent news, Target Corporation has faced several adjustments from various financial firms regarding its stock rating and price targets. BMO Capital Markets reduced Target’s price target from $100 to $95, maintaining a Market Perform rating due to concerns over declining comparable store sales and market share losses in early 2025. BofA Securities downgraded Target’s stock rating from Buy to Neutral, cutting the price target from $145 to $105, citing persistent sales weakness and potential margin pressure. Telsey Advisory Group also downgraded Target’s rating to Market Perform, lowering the price target from $130 to $110, following disappointing first-quarter earnings, which were below expectations.
Additionally, TD Cowen adjusted Target’s price target from $110 to $105, maintaining a Hold rating, due to ongoing challenges such as declining consumer confidence and backlash from Diversity, Equity, and Inclusion initiatives. Truist Securities, on the other hand, raised Target’s price target from $82 to $90 while maintaining a Hold rating, noting that while first-quarter results were weaker than consensus, they aligned with Truist’s projections. The firm expressed concerns over internal issues like inventory management and external pressures from competitors. Despite these varied assessments, all firms highlighted the impact of tariffs, inventory challenges, and strategic adjustments on Target’s near-term financial performance.
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