'Unheard Of': The Early Reaction To Target's Big Quarter

Target Corporation TGT reported a big second-quarter earnings and sales beat, which sent shares surging to new all-time highs.

Quarter In Review

Target's same-store sales of 3.4% beat estimates of 3% and e-commerce sales grew 34%. Research firm Edward Jones said the strong performance likely implies Target is gaining market share across multiple categories and drawing more traffic to stores.

Recent initiatives, including improved access to online purchases and delivery, are likely to continue driving market share and sales growth for the near term, the analysts wrote. The stock is "fairly valued" at around 14 times 2018 earnings, however, which is inline with the five-year historical average.

'Unheard Of' Metric

Contrary to multiple concerning earnings releases seen this earnings season, Target's second quarter proves the consumer is "very much still alive," Stacey Widlitz, president at SW Retail Advisors said during a "Bloomberg Daybreak: Americas" interview. Consumers are shopping in full force at Target as evidenced by 3.4% comp growth, of which three-quarters came from traffic.

"That is unheard of here," she said. "So that is where investors need to look. They need to look where the retailers are actually driving traffic, not just ticket."

Target's management also explained three-quarters of its online fulfillment came from consumers visiting stores to pick up an order, she said. This implies Target is able to satisfy the way consumers shop.

Price Action

Shares of Target hit a new all-time high of $102.70 and were up 19.7% at time of publication Wednesday afternoon.

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Photo courtesy of Target.