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Truist downbeat on Target shares, cites hurdles ahead

EditorEmilio Ghigini
Published 2024-05-23, 07:44 a/m
© Reuters.

On Thursday, Truist Securities adjusted its outlook on Target Corp (NYSE:TGT) shares, reducing the retailer's price target to $153 from $160, while keeping a Hold rating on the stock.

The adjustment comes after Target reported first-quarter results that met expectations, but failed to surpass them, marking a change from the previous two quarters of significant outperformance.

Target's comparable sales guidance of 0%-2% for both the second quarter and the full year was highlighted as a concern, particularly given the negative 4%-5% comparisons.

This guidance suggests Target may experience its worst two-year performance since the Great Recession. Truist Securities pointed out that this is occurring even as competitors continue to exhibit growth, which could indicate notable market share losses for Target.

The analyst also noted potential margin risks for Target, citing recent price reductions on frequently purchased items and the impending reintroduction of inventory, which could further pressure earnings.

Despite the stock's seemingly low valuation at current levels, the firm remains cautious due to the lack of momentum and increased earnings risks, prompting the decision to lower the price target while maintaining a Hold rating.

InvestingPro Insights

As investors digest the latest analysis from Truist Securities on Target Corp (NYSE:TGT), real-time data and insights from InvestingPro offer additional context to the retailer's current position. Despite the cautious stance from analysts, Target's commitment to shareholder returns is evident, having raised its dividend for an impressive 54 consecutive years, a testament to its long-term resilience. Additionally, the current relative strength index (RSI) suggests that the stock is in oversold territory, which could signal a potential buying opportunity for contrarian investors.

In terms of financial metrics, Target boasts a market capitalization of $66.28 billion and trades at a P/E ratio of 17.46, indicating a valuation that may be attractive relative to its near-term earnings growth. The company's revenue for the last twelve months as of Q1 2025 stands at $106.62 billion, despite a slight decline in growth. Importantly, Target's dividend yield remains robust at 3.07%, and the stock is trading at 78.83% of its 52-week high, underscoring the potential upside from its current levels.

For those seeking a deeper dive into Target's financial health and future prospects, InvestingPro offers additional InvestingPro Tips, including an analysis of the company's debt levels and profitability predictions for the year. There are 11 more tips available on the platform, which can be accessed with the promo code PRONEWS24 for an extra 10% off a yearly or biyearly Pro and Pro+ subscription. These insights could prove invaluable for investors looking to make an informed decision on whether to hold, fold, or double down on their Target investment.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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