Analysts at RBC Capital provided their outlook on Target Corporation (NYSE:TGT) ahead of the company’s upcoming Q2 earnings, scheduled to be released on August 17.
Given the company’s announced inventory optimization plan and cut guidance on June 7, just 3 weeks after reporting Q1 results (operating margin guidance from 5.3% to 2%), the analysts don’t expect too many surprises in Q2.
The analysts believe investors will be focused on the pace at which inventory levels normalize and figuring out if approximately 7-8% operating margins are achievable at any point in the near future.
At this point, the analysts remain hopeful that the company’s management baked enough conservatism into their revised guidance, but with continued consumer weakness and shares up around 22% off June lows, the analysts are hesitant to get too constructive into the print. The analysts expect comp sales growth of 4%, compared to the Street estimate of 3.2%.
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