Fubotv earnings beat by $0.10, revenue topped estimates
On Wednesday, TD Cowen, through its analyst Oliver Chen, adjusted the price target for Target Corporation (NYSE:TGT) stock, reducing it from $110.00 to $105.00, while maintaining a Hold rating. The revision reflects concerns over near-term trends that the analyst expects to persist into the second quarter. Target has faced several challenges, including five consecutive months of declining consumer confidence, uncertainties related to tariffs, and backlash from the company’s Diversity, Equity, and Inclusion (DEI) initiatives announced earlier in the year. According to InvestingPro data, 15 analysts have recently revised their earnings expectations downward, though the stock appears undervalued based on comprehensive Fair Value analysis. Despite these challenges, Target maintains a strong market position with a notable 4.57% dividend yield.
In the first quarter, Target reported a 3.8% decrease in comparable sales, with a greater impact from reduced customer traffic, which fell by 2.4%, compared to a 1.4% decline in average ticket size. Although discretionary spending remains under pressure, consumers seem to prioritize spending on seasonal items, new products, and attractive promotions—a trend that is likely to continue into the next quarter. The company’s financial resilience is evident in its $106.57 billion trailing twelve-month revenue and healthy gross profit margin of 28.21%.
Chen notes that lower sales and higher markdowns could be offset by reduced losses from inventory shrinkage and improvements in selling, general and administrative (SG&A) cost productivity. The price target of $105 is based on a 12 times forward-year two price-to-earnings (P/E) ratio, a valuation that remains unchanged from the previous assessment.
Looking ahead to fiscal year 2025, management’s strategy appears to be centered on maintaining competitive pricing to stimulate growth, despite the lack of clear drivers for gross margin improvement. Target has acknowledged the necessity to align inventory levels, which were reported to be 11% higher than sales in the first quarter, with the expectation that this realignment could be achieved by the third quarter. This process is likely to involve additional markdowns and adjustments to receipts, potentially pressuring gross margins at least through the second quarter. The company maintains strong financial health with an Overall Score of "GOOD" according to InvestingPro metrics, supported by solid cash flows that adequately cover interest payments.
Finally, in response to the impact of tariffs on half of its imports, Target has indicated that raising prices would be a measure of last resort. The company plans to leverage vendor relationships, re-evaluate its assortment, consider changes to the country of production, and adjust order timings. Additionally, Target has paused its share repurchases in April due to the financial strain from tariffs.
In other recent news, Target Corporation reported its Q1 2025 earnings, revealing a significant miss on both earnings per share (EPS) and revenue forecasts. The company posted an adjusted EPS of $1.30, falling short of the expected $1.65, and reported revenue of $23.85 billion, missing the forecasted $24.35 billion. This performance marks a deviation from previous quarters where the company met or exceeded forecasts. Jefferies analyst Corey Tarlowe cut the price target for Target stock from $130 to $120, maintaining a Buy rating, citing challenges such as weak in-store traffic and markdown pressures affecting profitability. Truist Securities also revised its outlook, raising the price target from $82 to $90 while maintaining a Hold rating, despite concerns over Target’s internal challenges and competitive pressures. Evercore ISI maintained its In Line rating with a $100 price target, noting that Target’s first-quarter performance fell short of expectations, with a notable decline in discretionary sales. Meanwhile, William Blair maintained an Outperform rating, highlighting Target’s effective execution amid market challenges and its stable outlook for the second quarter. These developments reflect a mixed sentiment from analysts, with concerns about Target’s ability to navigate current economic uncertainties and competitive pressures.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.