Target's Q4 Sales To Remain Challenged, Says Analyst

BofA Securities analyst Robert F. Ohmes has reiterated a Buy rating on the shares of Target Corp TGT with a price target of $160.

Target will report its fourth-quarter earnings on March 5.

The analyst expects a comparable sales decline of (5%), in-line with (4.9%) reported in the third quarter as moderating food & beverage inflation is expected.

The analyst sees continued soft discretionary trends to offset improving traffic supported by strategic & merchandising initiatives.

Despite near-term challenges, the analyst opines that investors may look through recent pressure to a potential inflection, which TGT may see in C2Q24.

The analyst’s Gross Margin (GM) forecast is ahead of the street in both the fourth quarter of 2023 and the full year of 2024.

The analyst sees upside opportunities from freight & transportation cost recovery, potential mix tailwinds as lower-margin electronics have underperformed higher-margin discretionary categories & beauty.

The rollout & ramp up of flow & sortation centers, and lower clearance levels & other efficiencies provided by leaner inventory levels are other reasons for the upside.

The analyst says the company’s recent merchandising initiatives and new private label brand launches should improve its value perception with customers and support traffic & share gains.

Press Release: TGT shares are trading higher by 1.31% at $154.92 on the last check Friday.

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