Target (NYSE: TGT) is set to report its fiscal first-quarter results on May 22, with expectations for revenues and earnings to surpass estimates. The company has shown progress in improving margins despite weak sales in 2023, and investors are optimistic about a growth rebound in 2024. Target anticipates a slight decline in comparable sales for Q1, with earnings per share expected to be between $1.70 and $2.10. For the full fiscal year, the company forecasts flat to 2% growth in comparable sales and earnings per share in the range of $8.60 to $9.60. Target’s focus on customer loyalty, omnichannel initiatives, and brand partnerships are expected to drive long-term benefits for the company.
In an effort to attract customers from rivals like Amazon and Walmart, Target recently introduced a new subscription tier called Target Circle 360, offering perks such as unlimited free same-day delivery and free two-day shipping for an annual fee of $49. Despite seeing little change in its stock price over the past few years, Target’s performance has lagged behind the S&P 500. The company underperformed the index in 2022 and 2023, with returns of -36% and -4%, respectively. With the current macroeconomic uncertainties, including high oil prices and elevated interest rates, it remains to be seen whether Target will outperform the S&P 500 over the next 12 months.
Trefis estimates Target’s valuation to be $178 per share, nearly 11% higher than the current market price. Revenues for Q1 2024 are expected to slightly surpass consensus estimates at around $24.9 billion, following a decline in sales in 2023. Target’s comparable sales fell by 3.7% in 2023 due to weak demand for discretionary goods. However, the company’s profitability has improved, with gross and operating margins showing significant growth in 2023. Full-year earnings per share reached $8.94, up 50% from the previous year, reflecting Target’s ability to deliver solid profits despite weaker demand.
With an EPS estimate of $9.42 and a P/E multiple of 18.9x in fiscal 2024, Trefis projects a price target of $178 for Target, indicating potential growth compared to the current market price. It is important to compare Target’s performance to its peers in the retail sector to assess its standing in the industry. Target’s focus on improving margins, customer loyalty, and innovative initiatives such as Target Circle 360 are expected to contribute to its long-term success and drive growth in the coming years. Investors and analysts will be closely watching Target’s fiscal first-quarter results to gain insights into the company’s performance and future prospects in a competitive retail landscape.
