Stock Story -
What Happened: Shares of general merchandise retailer Target (NYSE:TGT) fell 9.7% in the pre-market session after the company reported first quarter results that missed analysts' revenue and EPS expectations. The company recorded sales declines primarily in discretionary categories, highlighting the broad-based strain on consumers' wallets (mostly low-income earners) and spending capacity observed by other retailers this earnings season. In addition, guidance was weak, with both the next quarter and full-year earnings forecast missing analysts' expectations. Overall, this was a mediocre quarter for Target.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Target? Find out by reading the original article on StockStory, it's free.
What is the market telling us: Target's shares are somewhat volatile and over the last year have had 2 moves greater than 5%. In context of that, today's move is indicating the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 6 months ago, when the stock gained 14.8% on the news that the company reported third quarter results that blew past analysts' EPS expectations, driven by a small beat on revenue, better profitability, and a lower-than-expected tax rate. While same-store sales declined, the rate exceeded analysts' expectations. The company also generated healthy operating cash flows and repositioned its inventory into a healthier position. Next quarter's EPS guidance was slightly ahead of Consensus. Zooming out, we think this was an impressive quarter that should please shareholders, especially in light of some troubling consumer commentary from other companies.
Target is up 0.5% since the beginning of the year, but at $143.86 per share it is still trading 19.1% below its 52-week high of $177.82 from March 2024. Investors who bought $1,000 worth of Target's shares 5 years ago would now be looking at an investment worth $1,855.
![Why Target (TGT) Stock Is Nosediving](https://d68-invdn-com.investing.com/content/picf553999a121d99d6b9b9a6c804e15e68.jpeg)