Brian Sozzi On The Spot With Target (TGT)

Brian Sozzi of Wall Street Strategies is out with a research note on Target TGT after it reported earnings yesterday. Sozzi rates shares at a Hold, which he downgraded prior to the earnings call, and has a $51 price target. In the research note, Sozzi writes, "In my humble opinion, attention should be assigned to Target's margins and in that vein, there are headwinds that will likely cap the stock's multiple near-term. Storied investor Benjamin Graham would be proud of my analytical thought processes!" Sozzi notes that the company's own expectations may be rather opportunistic. "As well as a rising penetration of food, consumables, 5% Rewards sales, and inflation Target's comp guidance for FY11 of +4% to +5% sure seems juicy. The flat EBIT margin tempers the enthusiasm on the sales front, and with Canada being dilutive upfront ($0.10 per share impact in FY11) downward adjustments to consensus forecasts seem forthcoming. I reduced my FY11 EPS estimate to $4.30 from $4.50 (we are part of consensus forecasts), also accounting for fewer share repurchases relative to our prior modeling. For FY12, I am at $4.70 per share, which assumes 10% EPS growth. Given the lack of multiple expansion I anticipate, no change to my Hold rating (downgraded pre-earnings call) was appropriate." Yesterday shares of Target gained $1.74 yesterday to close at $52.00, a gain of 3.46%.