On Wednesday, Goldman Sachs (NYSE:GS) reaffirmed its Conviction Buy rating on Target Corporation (NYSE:TGT) with a steady price target of $194.00 for the shares.
Target's first-quarter 2024 earnings per share (EPS) of $2.03 fell short of Goldman Sachs and consensus estimates of $2.15 and $2.06, respectively.
Same-store sales (SSS) declined by 3.7%, matching consensus predictions, with notable decreases in both customer traffic and ticket, each down by 1.9%. However, Target highlighted that customers remain attracted to new and value-driven offerings.
In terms of sales channels, in-store sales saw a larger dip, falling by 4.8%, while e-commerce sales experienced a modest rise of 1.4%.
The report specifically pointed out the nearly 9% increase in same-day services, bolstered by a significant 13% growth in their drive-up service.
The company also observed a near 4 percentage point improvement in apparel sales compared to the fourth quarter of 2023, signaling a positive shift in discretionary spending trends.
Looking ahead, Target has reiterated its full-year 2024 guidance, expecting SSS to range from flat to a 2% increase, aligning with Goldman Sachs' projection of a 1.9% increase and outpacing the consensus estimate of a 0.9% rise.
The EPS forecast for the year remains set at $8.60 to $9.60, compared to the higher expectations of Goldman Sachs and consensus at $9.81 and $9.43, respectively.
For the second quarter of 2024, Target anticipates SSS to be flat to up 2%, which is below Goldman Sachs' expectation of a 3.0% increase and slightly under the consensus estimate of a 1.4% rise.
The EPS guidance for the quarter is set at $1.95 to $2.35, whereas Goldman Sachs and consensus estimates were previously set at $2.47 and $2.19, respectively.
InvestingPro Insights
Target Corporation (NYSE:TGT) has demonstrated resilience and adaptability in its operations, as highlighted by Goldman Sachs' Conviction Buy rating and a robust price target. The company's ability to maintain a strong dividend track record, having raised its dividend for 53 consecutive years, is a testament to its financial stability and commitment to shareholder value, according to InvestingPro Tips.
From a valuation perspective, Target is trading at a P/E ratio of 17.36, which is considered low relative to its near-term earnings growth. This could indicate that the stock is undervalued, presenting a potential opportunity for investors. The company's moderate level of debt and strong return over the last decade also contribute to its attractive investment profile. For investors looking for more in-depth analysis and additional tips, there are 6 more InvestingPro Tips available, which can be accessed with an exclusive coupon code for a 10% discount on a yearly or biyearly Pro and Pro+ subscription: PRONEWS24.
InvestingPro Data further enriches our understanding of Target's financial health with a market capitalization of $72.07B USD and a Price / Book ratio of 5.37 as of the last twelve months ending Q4 2024. The company's revenue stands at $107.41B USD, with a Gross Profit Margin of 27.63%, underscoring its efficiency in generating income relative to its sales. With an Operating Income Margin of 5.49%, Target continues to navigate the competitive retail landscape effectively.
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