Yahoo Finanza Target Shares Soar After Q4 Earnings Blow Past Estimates
Target Corp. shares soared over 12% on Tuesday after the Minneapolis, Minnesota-based company reported better-than-expected earnings in the holiday quarter and forecast solid sales this year despite ongoing supply chain disruption.
The company, which is one of the largest North American retailers offering customers both everyday essentials and fashionables, reported quarterly adjusted earnings of $3.19 per share, beating the Wall Street consensus estimates of $2.85 per share.
The retailer said its revenue climbed over 9.0% to $31 billion in the fiscal fourth quarter ended Jan from a year earlier. That missed the market expectations of $31.39 billion. Target’s total comparable sales grew 8.9% in the fourth quarter, reflecting comparable stores sales growth of 8.9% and digital sales growth of 9.2%.
“Our strong fourth-quarter performance capped off a year of record growth in 2021, reinforcing the durability of our business model and our confidence in long-term profitable growth,” said Brian Cornell, chairman and CEO of Target.
For the fiscal year 2022, Target forecasts low- to mid-single-digit revenue growth, an operating margin rate of 8% or higher, low-single-digit growth in operating margin dollars, and high-single-digit growth in Adjusted Earnings per Share.
The company expects quarterly, year-over-year profit performance will be variable during the year and generally improve as the year progresses. The company expects its first-quarter 2022 operating margin rate will be favourable in relation to historical performance, but well below its first-quarter 2021 rate of 9.8%.
On Tuesday, Target stock surged over 12% to $227.10. The stock fell over 4% so far this year after surging more than 30% in 2021.
Analyst Comments
“Target beat 4Q21 consensus estimates with better-than-expected margins. But, the highlight of the release is the 2022 guidance, where Target is endorsing a continuation of 8% or higher operating margins. Many expected an outlook that included more of a give-back relative to the 8%+ outlook for 2021 (this yr ended up being 8.4%),” noted Michael Baker, Senior Research Analyst at D.A. Davidson.
“In the five years prior to the pandemic, operating margins averaged 6.3% and ranged from 5.9%-7.1%. The pre-pandemic all-time high was 7.8% in 2010. This shows that the operational improvements, which were taking hold prior to the pandemic, along with the share gains over the last 2 yrs, are proving to be sustainable.”
Target Stock Price Forecast
Thirteen analysts who offered stock ratings for Target in the last three months forecast the average price in 12 months of $266.17 with a high forecast of $305.00 and a low forecast of $230.00.
The average price target represents a 19.66% change from the last price of $222.44. Of those 13 analysts, eight rated “Buy”, five rated “Hold”, while none rated “Sell”, according to Tipranks.
Morgan Stanley gave the base target price of $255 with a high of $315 under a bull scenario and $165 under the worst-case scenario. The investment bank gave an “Equal-weight” rating on the big-box retailer’s stock.
“Estimates going higher as business expected to compound post-COVID-19. Guide much better than feared. Traffic driven comps impressive, an anomaly across Retail. 8% EBIT margin now the new water level,” noted Simeon Gutman, equity analyst at Morgan Stanley.
“Target (TGT) has firmly established itself as a winner in Retail and deserves a premium multiple vs. historical valuations. Target (TGT) is gaining market share on top of 2020’s wallet share gains, we think Target (TGT) is one of the more attractive ways to play the upside to GDP. We see a positive risk/reward skew in the N-T but results could moderate and the stock path may be uneven, keeping us Equal-weight.”
Several analysts have also updated their stock outlook. Deutsche Bank lowered the target price to $305 from $312. Cowen and company cut the target price to $265 from $300. Goldman Sachs slashed the price target to $271 from $310.
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This article was originally posted on FX Empire
