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TD Cowen has made an adjustment to its price target on shares of Target Corporation (NYSE: NYSE:TGT), increasing it to $180 from the previous $165, while keeping a Hold rating on the stock.
This adjustment comes in the wake of Target's second-quarter earnings per share (EPS) outperforming expectations. The retailer reported a $2.57 EPS, surpassing the forecasted $2.18, attributed to improved traffic-driven comparable sales, which saw a 2% increase. This marks the first positive comparable sales since the fourth quarter of 2022.
Target's recent financial performance was bolstered by stronger gross margins, which reached 28.9%, a year-over-year improvement of 190 basis points and exceeding the anticipated increase of 120 basis points. The company's success was driven in part by a 3% rise in apparel sales and a notable 9% increase in beauty sales, with contributions from all product categories.
The analyst from TD Cowen highlighted that Target's effective low-price strategy and favorable comparisons to previous periods have played a role in the company's recent achievements. Additionally, there was no observed change in consumer health, which suggests that Target's customer base remains stable in their purchasing habits.
Meanwhile, UBS has raised the company's price target to $200, maintaining a Buy rating, following an encouraging second-quarter performance involving increased customer traffic and robust gross margin improvements.
On the other hand, BofA Securities raised its price target to $195, citing a strong second quarter and expected sustained gross margin strength. The earnings per share (EPS) estimate for fiscal year 2025 has been adjusted to $9.70, up from the previous $9.45 estimate.
Moreover, RBC Capital has also increased its price target for Target from $174 to $177, maintaining an Outperform rating. The firm anticipates sales growth of 0.4% and 1.5% for fiscal years 2024 and 2025, respectively.
Also, Morgan Stanley reaffirmed its Overweight rating on Target's stock, citing strong growth potential and the company's ability to regain market share. Evercore ISI raised its price target for Target to $160, noting an uptick in customer traffic and improved profit margins.
InvestingPro Insights
Target Corporation (NYSE:TGT) has recently been under the spotlight with its shares receiving an updated price target from TD Cowen. The retailer's performance has been underpinned by a number of financial metrics and strategic initiatives that offer a deeper insight into its market position. According to InvestingPro data, Target boasts a market capitalization of $73.51 billion and a P/E ratio of 14.91, indicating a potentially undervalued stock relative to its near-term earnings growth. The company has also demonstrated a significant return over the last week, with a 13.3% price total return, showcasing strong short-term performance.
In terms of InvestingPro Tips, it's noteworthy that Target has raised its dividend for 53 consecutive years, reflecting a strong commitment to shareholder returns. This is complemented by the company's moderate level of debt, which contributes to its financial stability. For investors looking for more comprehensive analysis, there are additional InvestingPro Tips available, including insights on Target's liquidity and profitability. As of now, Target operates as a prominent player in the Consumer Staples Distribution & Retail industry, and analysts predict the company will be profitable this year, a sentiment reflected in the retailer's positive earnings report.
For those seeking further guidance and information, InvestingPro offers a suite of additional tips to help investors make informed decisions. The service includes a detailed analysis of Target's financial health and market performance. For a more in-depth look at Target's investment potential, visit the dedicated page at https://www.investing.com/pro/TGT.
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