4 Analyst Takeaways From Target Earnings

Target Corporation TGT reported second-quarter revenues of $26.04 billion — just shy of a consensus estimate of $26.09 billion. Adjusted earnings were 39 cents per share, missing expectations of 73 cents per share.

Raymond James On Target

Analyst Bobby Griffin reaffirmed a Strong Buy rating, while raising the price target from $190 to $200.

The analyst reduced the fiscal 2022 estimates for the Minneapolis-based company mostly to reflect the second quarter’s lower-than-expected gross margins. “Importantly, our FY23 EPS estimates remains unchanged, as we estimate a large part of the cost pressures occurring in FY22 are transitory and will not repeat in FY23,” Griffin wrote in a note.

“We continue to believe Target’s long-term opportunities are favorable and expect Target’s inventory to be more right-sized entering F4Q22,” he added.

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Morgan Stanley On Target

Analyst Simeon Gutman reiterated an Equal-Weight rating, with an unchanged price target of $190.

“Q2 came in weaker than lowered guidance (1.2% EBIT margin vs guided ~2%),and most importantly, the spread between 3-year inventory and sales growth actually widened to 26.9% from 23.8% in Q1 despite impairments and markdowns,” Gutman said in a note.

RBC Capital Markets On Target

Analyst Steven Shemesh maintained an Outperform rating, while reducing the price target from $223 to $231.

“Target missed both top and bottom line expectations, but maintained guidance, which should provide investors some comfort that we could be past the worst of the problem,” Shemesh said in a note. “With residual noise expected over the next 1-2 quarters, the focus shifts towards FY'23 margin potential."

BMO Capital Markets On Target

Analyst Kelly Bania reaffirmed an Outperform rating and a price target of $190.

“TGT's F2Q23 was volatile as EBIT missed on worse-than-expected GM% declines, but 2H guidance was reaffirmed based on very solid comps, traffic, and unit share trends,” Bania wrote. “However, we believe trends may be somewhat difficult for investors to interpret given significant promotions in 2Q, even despite management's commentary that promotions had a negligible top-line impact."

TGT Price Action: Shares of Target had declined by 0.96% to $173.65 at the time of publication Thursday.

Photo: Mike Mozart from Flickr.