TGT: New Store Openings Slowly Accelerate

Analysts at Piper Jaffray reiterate their "overweight" rating on Target Corporation TGT, while reducing their estimates for the company. The target price for TGT is set to $59. According to Piper Jaffray, “P-Fresh stores contributed 70bps to quarterly comps and mgmt expects 100+bps this fall. The concept continues to drive cross-shopping into higher margin categories….Apparel continues to be a top-performing category with women's apparel and shoes increasing +HSD. Other top categories include food and health & beauty. Home remains weaker but should improve due to assortment changes, a brand relaunch, and new designer partnerships.” “Mgmt plans to open 10 stores in CY10, 20 in CY11, and 30 in CY12. New store growth remains muted due to limited commercial development; historically, 2/3 of new stores were in new developments. In the near term, the focus remains on remodeling existing stores and the rollout of the P-Fresh concept (now 300+ w/ after 116 remodels in FQ2),” the analysts mention. Piper Jaffray adds, “Credit revenue of $406M was below our $434M est due to lower balances and late fees. Bad debt expense fell to $138M which effectively increased the profitability of the segment. The impact of new credit card legislation will be felt the most in FQ3 as mgmt expects late fee income to be 33% lower than the 1H run rate.” Piper Jaffray has lowered its EPS estimates for FY11 from $3.92 to $3.91. More Analyst Ratings here