Citigroup Reiterates Buy Rating on Target Corp. (TGT)

Citigroup is out with a research report this morning, where it reiterates its Buy rating on Target Corp. TGT; it has a $72.00 price target on the stock. The Citi analysts cited the company’s recent earnings report, which was below their estimates; the company’s guidance was in-line with the consensus and better than Citi’s estimates. The analysts noted that in its KC test market, TGT is experiencing a +50% sales lift from households that sign up for the private label card, and existing cardholders have also significantly increased their shopping frequency. They noted that, “TGT is gaining share of wallet from its "better" and "best" customers and expects the 5% rewards program to contribute +100 bps to SSS in 4Q10.” As for valuation, they noted, “Management provided 3Q10 EPS guid. of $0.68 and 4Q10 EPS guid. of $1.38, implying full-year EPS guid. of $3.88. We are lowering our 2010 EPS est. to $3.90, vs. $3.93 prev., reflecting today's EPS miss and more conservative EBIT margin assumptions.”