Target Shares Down 30% This Week, Q1 Results Review

Target (NYSE:TGT) shares lost almost 30% this week as a result of reported disappointing Q1 results, with EPS of $2.19 missing the street estimate of $3.07. Revenue came in at $24.83 billion, compared to the Street estimate of $24.47 billion. For full-year 2022, the company anticipates revenue growth in the low-to mid-single digits.
RBC Capital analysts provided their views on the company, lowering their estimates and price target, but believing the stock sell-off is overdone.
Similar to Walmart, Target beat on comp, but experienced significant margin contraction year-over-year. While lingering cost headwinds and increased uncertainty around the financial health of the US consumer warrant numbers coming down, the analysts remain of the view that the company is structurally a faster growing, higher margin business post-strategic reset. As such the analysts thinks the company would weather any potential economic downturn better than they have historically.
The analysts lowered 2022/2023 EPS estimates to $10.57/$13.27 from $14.59/$15.84, and moved their target to $239 from $294 while maintaining the outperform rating.

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