Tuesday's Market Minute: Market Minute: Consumer Strength, Margins On Trial With TGT, WMT

How well consumers simultaneously handled stubbornly higher food prices, elevated gas prices and navigated fear from banking turmoil will be on display during retail earnings this week. And with the spotlight on Target TGT and Walmart WMT, investors will find out whether slower discretionary spending has eaten away at margins or driven consumers to the retail giants for more affordable choices.

Analysts say it’ll likely be both. 

While Target slightly beat analysts’ estimates in the last quarterly results, executives revealed profit and margins were declining. So it makes sense that analysts are taking a cautious approach on Target ahead of its earnings release on Wednesday. Credit Suisse recently reiterated a neutral rating and kept the price target at $170 a share. And while JPMorgan kept an outperform rating, analysts cut their price target on the stock to $175 from $205.

Walmart, on the other hand, is in a position of strength in its category, and analysts are more constructive on this stock. Not only is it diversified in many of the major retailer subsectors, but it’s benefitting from the trade-down effect amid inflation that’s normalizing, which is helping it gain more market share. Although Walmart saw some softness in its general merchandise category, it continues to see strength in grocery sales and growth in its private-label business. Analysts believe the retailer will be able to defend its position when it reports on Thursday. Credit Suisse reiterated an outperform rating on Walmart with a $170 price target.

Make sure you stay tuned to the TD Ameritrade Network for coverage of these names and more.

Image sourced from Shutterstock

This post contains sponsored advertising content. This content is for informational purposes only and not intended to be investing advice.