On Monday (NASDAQ:MNDY), Citi reiterated its Buy rating and $188.00 price target on Target Corporation (NYSE:NYSE:TGT), ahead of the company's third-quarter earnings report. The firm expects Target to post sales figures slightly below the market consensus but believes earnings per share (EPS) will surpass expectations.
Citi's analysts have forecasted comparable store sales (comps) to increase by 1.0%, which is slightly under the consensus estimate of 1.6%.
Data from Placer regarding foot traffic and Similarweb (NYSE:SMWB)'s web traffic analysis suggest a slowdown in Target's sales this quarter. The anticipated dip in sales is partially attributed to unseasonably warm weather, which Citi analysts think may have impacted consumer behavior. However, they anticipate that management will point out stronger performance in categories not affected by weather conditions.
Citi projects a third-quarter EPS of $2.47 for Target, which is higher than the consensus estimate of $2.30 and above the company's own guidance range of $2.10 to $2.40. Additionally, Citi anticipates that Target's management will revise the full-year guidance upwards, from the current $9.00-$9.70 to a new range of $9.20-$9.80, compared to the consensus forecast of $9.57.
The firm also expects a positive outlook from Target's management regarding the upcoming holiday season. Despite a 7% decline in Target's stock price since the second-quarter report, Citi suggests that investor sentiment might lean more toward the negative side. This perception comes from discussions with investors, highlighting Target as one of the more debated stocks within Citi's coverage group.
In other recent news, Target Corporation has been making significant strides in its business strategy. The company has announced a major reduction in prices on over 2,000 items in preparation for the holiday season. This move is part of Target's strategy to bolster consumer traffic and sales, particularly during the festive season.
In addition to these price reductions, Target has reported strong Q2 results, with a 2% increase in comparable sales and an impressive 42% surge in earnings per share, reaching $2.57. The company also completed a $750 million notes sale in an agreement with Deutsche Bank (ETR:DBKGn) Securities Inc., J.P. Morgan Securities LLC, and Wells Fargo (NYSE:WFC) Securities, LLC.
On the executive front, Target has appointed Jim Lee as its new Chief Financial Officer. Lee, who has 26 years of experience from PepsiCo (NASDAQ:PEP), is expected to provide valuable expertise.
Jefferies has sustained its buy rating on Target shares, citing Lee's appointment, while TD Cowen maintains a hold rating. Furthermore, Jefferies has reaffirmed its Buy rating and $195.00 price target on Target, following the retailer's announcement of price reductions. Meanwhile, TD Cowen maintains its Hold rating on Target's shares, with a consistent price target of $180.00.
Finally, Mastercard (NYSE:MA) has predicted a 3.2% rise in U.S. retail sales for the upcoming holiday season, a forecast that could have implications for Target's sales performance during this period.
InvestingPro Insights
Target Corporation's financial metrics and InvestingPro Tips provide additional context to Citi's optimistic outlook. The company's P/E ratio of 15.47 and adjusted P/E ratio of 15.1 for the last twelve months suggest that Target is trading at a relatively modest valuation compared to its earnings potential. This aligns with one of the InvestingPro Tips, which notes that Target is "Trading at a low P/E ratio relative to near-term earnings growth."
Moreover, Target's dividend profile is particularly strong. An InvestingPro Tip highlights that the company "Has raised its dividend for 54 consecutive years," demonstrating a long-term commitment to shareholder returns. This is further supported by the current dividend yield of 2.99%, which may attract income-focused investors.
The company's revenue for the last twelve months stands at $107.3 billion, with a gross profit margin of 28.42%. While revenue growth has been slightly negative at -0.66% over the same period, the quarterly revenue growth of 2.74% in Q2 2025 suggests a potential turnaround, which could support Citi's expectations for improved performance.
InvestingPro offers 8 additional tips for Target, providing investors with a more comprehensive analysis of the company's financial health and market position. These insights can be particularly valuable when considering Citi's Buy rating and the upcoming earnings report.
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