Target (TGT): It May be Time to Buy the Blood in the Streets

0
169

Target (TGT) may finally be bottoming out.

All after the stock suffered through a brutal 2022.

But that’ll happen with sky-high inflation, fears of a recession, and Americans living paycheck to paycheck.  Things were so bad for Target that it missed third-quarter EPS with a print of $1.54, which was below expectations for $2.16.

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.  The good news was revenue was $26.5 billion, which slightly beat expectations for $26.4 billion.

However, despite all of that negativity, the stock appears attractive.  Piper Sandler agrees, 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, it will be able to regain 50% of its gross margin compression, as noted by Yahoo Finance.

Bernstein analysts also now have an outperform rating on TGT with a price target of $190. Recent share pullbacks, and the general macro uncertainty, “have created some potentially compelling entry points. With turbulence comes opportunity,” noted the firm.

In addition, Target carries a dividend yield of about 2.7%.  And, at current prices, Target offers a strong, compelling opportunity for patient investors.  Target is also a company with a very long history of success. We believe the company will look back at 2022 as a bump in the road.