Robinhood shares gain on Q2 beat, as user and crypto growth accelerate
On Friday, Telsey Advisory Group reaffirmed its optimistic stance on shares of Target Corporation (NYSE:TGT), maintaining an Outperform rating and a $190.00 price target for the retail giant's stock. The firm's analysis suggests an anticipated sequential improvement in Target's business for the second quarter of 2024.
Telsey's projections for the quarter include an earnings per share (EPS) estimate of $2.19, aligning with the consensus, and a 1.5% comparable sales growth, slightly above the FactSet consensus of 1.3%. The firm also anticipates an operating margin expansion of approximately 70 basis points to 5.5%.
The positive outlook is partly based on Target overcoming challenges from the previous year, particularly those associated with the Pride merchandise issue. Telsey also highlighted the potential impact of successful promotions such as Target Circle Week, which took place from July 7 to July 13, and noted the retailer's continued strength in essential goods, groceries, and beauty products. According to Placer.ai data, Target enjoyed a resurgence in customer traffic from late May through July.
Telsey drew parallels between Target's anticipated performance and the recently reported second quarter results of Walmart (NYSE:NYSE:WMT), which showed strong growth in comparable sales, transactions, and e-commerce. These results from Walmart are seen as positive indicators for Target's own performance.
The firm's confidence in Target is further bolstered by the retailer's strategic initiatives, including the expansion of private brands, store renovations, supply chain enhancements, digital and Drive Up services, an upgraded loyalty program, and the Target + marketplace. Additionally, partnerships with well-known brands such as Apple (NASDAQ:AAPL), Disney, Levi's (NYSE:LEVI), and Ulta are expected to contribute to Target's growth.
The $190 price target set by Telsey is based on applying an estimated price-to-earnings (P/E) multiple of approximately 18 times to Target's projected 2025 EPS of $10.66. This target reflects the firm's anticipation of Target's continued focus on value offerings and innovative strategies to drive growth.
In other recent news, Target Corporation has been the subject of various developments. Morgan Stanley maintained an Overweight rating on Target, suggesting that second-quarter results for fiscal year 2024 are anticipated to meet expectations, although significant earnings growth may be challenging without notable gross margin improvements.
The firm also indicated a cautious stance on the likelihood of earnings outperformance for the year 2024 unless the company can achieve considerable expansion in its gross margins.
Target has also announced the appointment of Amy Tu as the new Chief Legal, Compliance Officer, and Corporate Secretary. She brings extensive experience from senior legal positions at Walmart and The Gap, and will succeed Don Liu, who is retiring but will continue as a Strategic Advisor until May 2025. In addition, Target has been proactive in addressing shrinkage issues, which have affected margins, with expectations to stabilize and decrease in 2024.
The company has also announced a strategic partnership with Shopify (NYSE:SHOP) to expand its online marketplace. Despite a 3.7% dip in comparable sales, the company reported a 39% revenue increase compared to 2019, totaling over $24.5 billion. Political unrest in Bangladesh may impact the nation's garment industry, potentially influencing Target's supply chains and inventory levels. These are some of the recent developments at Target Corporation.
InvestingPro Insights
Target Corporation's (NYSE:TGT) commitment to steady growth and shareholder returns is highlighted by its impressive track record of raising dividends, now for 54 consecutive years, according to InvestingPro Tips. This consistency in rewarding investors is a testament to the company's financial health and management's confidence in its business model. Target is currently trading at an attractive P/E ratio of 15.85, which is appealing given its near-term earnings growth prospects.
InvestingPro Data further enriches our understanding of Target's financial landscape. With a market capitalization of $65.54 billion and a PEG ratio of 0.3, Target showcases a balance between value and growth potential. Moreover, the company's revenue for the last twelve months as of Q1 2025 stands at $106.62 billion, despite a slight decline in revenue growth. The operating income margin for the same period is 5.51%, aligning closely with Telsey's projections for Q2 2024, indicating Target's operational efficiency.
For investors seeking more in-depth analysis, there are additional InvestingPro Tips available that provide valuable insights into Target's financial health, including its moderate level of debt and profitability over the last twelve months. These data points and expert insights are accessible through InvestingPro's comprehensive platform.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.