Target Corp stock hit a new all-time high on Wednesday after the Minneapolis, Minnesota-based retailer reported better-than-expected earnings and earnings in the first quarter.
One of North America’s largest retailers that offer customers both basic and trendy items said its adjusted first-quarter earnings per share rose 525% year-on-year. another at $ 3.69, beating Wall Street consensus estimates of $ 2.26 per share.
The mass retail company said its comparable sales grew 22.9% in the first quarter, reflecting same-store sales growth of 18% and digital comparable sales growth of 50%. Total revenue of $ 24.2 billion was up 23.4% from a year ago, driven by total sales growth of 23.3% and a 30.4% increase in other revenue. This was more than market expectations of $ 21.51 billion.
For the second quarter of 2021, the company expects medium to high single-digit same-store sales growth. The company expects its second quarter operating margin rate to be well above the 2019 second quarter rate of 7.2%, but likely not as high as last year’s all-time 10% rate.
The company expects positive single-digit same-store sales growth in the last two quarters of the year and expects its operating margin rate for the full year to be well above the rate of 2020 by 7.0%, with the potential to reach 8% or a little more.
Following the bullish results, Target Corp stock rose more than 5% to $ 217.47 on Wednesday.
“Target’s EPS of $ 3.69 easily beat Cowen and Street on comps + 22.9% and EBIT margin hitting 9.8%. E-comm + 50% in addition to + 141% and stores achieved more than 95% of sales. The improved outlook for FY21 suggests that TGT is well placed for comp-the-comp. From Cowen’s perspective: TGT’s connected consumer and delivery innovation + resonating proprietary product mix + stores and services = winning formula, ”noted Oliver Chen, Equity Analyst at Cowen.
Target Corp share price forecast
Twenty analysts who have offered stock quotes for Target Corp in the past three months are forecasting the 12-month average price of $ 217.58 with a high forecast of $ 260.00 and a low forecast of $ 170.00.
The average price target represents an increase of 0.22% from the last price of $ 217.10. Of those 20 analysts, 16 rated “Buy”, four rated “Hold” and none rated “Sell,” according to Tipranks.
Morgan Stanley gave the stock price forecast of $ 205 with a high of $ 260 in a bullish scenario and $ 145 in a worst-case scenario. The firm assigned an “equal weight” rating to the shares of the mass retail company.
“Major beat and major increase. Most confident advice increases in our coverage as Target Corp (TGT) epitomizes “comping the comp”. The 2021 estimates could rise to $ 12- $ 13, the key to feeding 2022 EPS, ”noted Simeon Gutman, equity analyst at Morgan Stanley.
“We expect the title to move significantly higher on these results. We suspect that 2021 market expectations for BPA power could be anywhere between $ 12 and $ 13 on EBIT margins of 8%. This implies that TGT is trading closer to 16x from the current multiple of ~ 22x NTM. 16x seems low compared to all of TGT’s peers, leaders in high-quality retail. “
Several other analysts have also updated their stock market outlook. Target saw its stock price forecast raised by stock analysts at Telsey Advisory Group to $ 235 from $ 215. The brokerage currently has an “outperform” rating on the retailer’s shares.
Additionally, Deutsche Bank raised the target price from $ 213 to $ 225. Jefferies increased the target price from $ 188 to $ 210. JP Morgan increased the target price from $ 230 to $ 233. UBS raised the target price from $ 185 to $ 210.
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