Weakness in Target (TGT) appears to have been temporary.
Sure, Target earnings per share missed, margins got nailed, and management lowered guidance for the fourth quarter. Operating income fell almost 50% to $1 billion from $2 billion year over year. EPS was $1.54, which was below expectations for $2.16. The good news was revenue was $26.5 bullion, which slightly beat expectations for $26.4 billion.
Despite a good deal of negativity, the stock appears attractive. Piper Sandler appears to agree, upgrading the TGT stock to overweight with a price target of $200.
Analyst Edward Yruma said, “Target is rapidly shifting inventory composition away from discretionary categories as the consumer continues to shift away from those key categories.” He also thinks that as Target pulls back on some of its promotional activity as we look ahead to 2023, that it will be able to regain 50% of its gross margin compression, as noted by Yahoo Finance.
That upgrade is why TGT was up $6.54 in yesterday’s trade.