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Target (TGT) is scheduled to report results of its first quarter before the market open on Tuesday, May 21. The company will host earnings conference call at 8am EST. What to watch for:
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GUIDANCE: In March, Target forecast fiscal 2025 adjusted earnings per share of $8.80-$9.80 on revenue up 1% and flat comparable sales. Analysts currently expect $8.65 for EPS and $106.98B in revenue for the fiscal year. CEO Brian Cornell said the company expects more than $15B sales growth over the next five years.
JPMorgan reduced estimates for Q1 and the year on sales softness and promotional risk. JPMorgan expects a guidance cut from Target. Uncertainty and tough weather affected goods purchasing in Q1 with some improvement in April on less punitive weather and the Easter shift, the analyst told investors in a research note. Citi expects the company’s Q1 sales and earnings to come in below consensus. Foot traffic data indicates Target’s traffic did not accelerate in March, and only accelerated slightly in April, the analyst told investors. Citi believes investors expect a guidance cut. While expectations are low, soft sales trends and an earnings miss could move the stock lower near-term, contended Citi. Meanwhile, Morgan Stanley said Q1 comps likely slowed and 2025 guidance is due for revision, though Target is pursuing the right omnichannel and retail media priorities longer-term.
‘GOING GETTING TOUGH’: Bernstein on May 12 downgraded Target to Underperform from Market Perform with a price target of $82, down from $97. The firm says “the going is getting tough for Target.” Credit card data “paints a bleak picture” for the company’s Q1, dampened by poor weather, weak consumer sentiment, and a DEI-related strike in March, the analyst tells investors in a research note. Bernstein believes this is all before tariffs “enter the frame,” which means that Target will likely have to lower guidance for the full year. It thinks Target faces a difficult trade off between stimulating sales growth and maintaining margins. The firm’s analysis shows that it is “unlikely to achieve both and, increasingly, neither.”
While Target’s Q1 risks seem well documented, its underlying trends seem more concerning, Barclays said ahead of the earnings report. When looking beyond the tariffs, questions remain over how much of the sales slowdown was transactions-driven as that has been a key support of the Target story “but seems to have weakened,” the analyst said. Barclays believes this could add further multiple risk to the story. Target’s multi-year share gains since 2020 continue to reverse, and it is not clear how that changes at this point, the firm argued.