Hitting The Bullseye: How Target's Q1 Earnings Outshine Analyst Expectations

Telsey Advisory Group analyst Joseph Feldman reiterated an Outperform rating on the shares of Target Corp TGT with a price target of $185.
Target reported 1Q23 EPS of $2.05, ahead of the analyst’s estimate of $1.90 and the FactSet consensus (FS) of $1.77, driven by better-than-anticipated operating margin.
In 1Q23, total sales increased 0.6% to $25.3 billion, with comparable sales remaining flat.
By category, the company saw ongoing strength in food, essentials, and beauty, as well as Valentine’s Day and Easter assortments, partly offset by softness in select discretionary categories.
Inventory declined 16.4% vs. sales growth of 0.6%, primarily due to the reduction of more than 25% in discretionary categories, partially offset by higher inventory in frequency categories, noted the analyst.
The analyst opined that the pressure on sales and profits mirrored by gloomy guidance likely reflects the impact of macro pressures on spending and higher shrink.
The analyst believes Target is executing well in a tough economic environment and beyond near-term challenges, the company should gain market share in the medium term, supported by ongoing strategies.
Price Action: TGT shares are trading higher by 2.84% at $161.36 on the last check Wednesday.