Target Q4 Beats Expectations, Analysts See Profit Pressure Ahead

Shares of Target Corp TGT were trading lower on Tuesday, after the company reported its fourth-quarter results.

The results came in amid an exciting earnings season. Here are some key analyst takeaways.

Telsey Advisory Group On Target

Analyst Joseph Feldman reiterated an Outperform rating and price target of $150.

Target reported its fourth-quarter earnings at $2.41 per share, beating consensus of $2.26 per share, with in-line comps and better-than-expected operating margins, Feldman said in a note. Although traffic grew 2.1% during the quarter, the impact was partly offset by a 0.6% decline in average ticket, he added.

Target's operating margins contracted by 110 basis points to 4.7%, while gross margins declined by 36 basis points to 26.2%, "reflecting higher digital fulfillment and supply chain costs as well as elevated promotions and clearance rates," the analyst wrote. The company expects its profits to be under "meaningful pressure" in the first quarter, "given a softer start to February, uncertainty related to consumer spending trends and potential tariffs," he further stated.

Check out other analyst stock ratings.

Roth Capital Partners On Target

Analyst Bill Kirk maintained a Neutral rating and price target of $131.

Target guided to fiscal 2025 net sales growth of around 1%, below consensus of 3%, and flat comp store sales, versus consensus of 1.6%, Kirk said. The company's guidance "suggests the macro environment does not improve," he added.

"Importantly, the year has started below the guided plan, with February experiencing a small net sales decline," the analyst wrote. The sales decline in February could exert "meaningful" pressure on Target's profits in the first quarter, which means the company would need to improve its business to achieve the fiscal 2025 guided ranges, he further stated.

JPMorgan On Target

Analyst Christopher Horvers reaffirmed a Neutral rating on the stock.

Target reported fourth-quarter comps of 1.5%, in-line with expectations, with strong traffic and digital performance, Horvers said. However, the company expects its comps to be roughly flat on net sales growth around 1%, he added.

Management guided earnings from $8.80 per share to $9.80 per share, "implying low 5% op margin at the midpoint," the analyst stated. The company indicated that "ongoing consumer uncertainty, a weak February, the timing of certain costs, and tariff uncertainty are expected to create meaningful YOY profit pressure in 1Q vs. the remainder of FY25," he further wrote.

TGT Price Action: Shares of Target were down 5.7% to $113.84 at the time of publication on Tuesday.

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