Morgan Stanley Cuts Estimates as Target (TGT) Reports Tough 2Q Comps
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Morgan Stanley reiterated an Underweight rating on Target (NYSE: TGT), and cut the price target to $64.00 (from $67.00), following the company's 2Q earnings report. TGT reported its second consecutive quarter of underwhelming comps & top-line guide down. Morgan Stanley expects EBITDA margins to contract 100 bps to 9.5% over the next 3 years. TGT's comps have also slowed as other retailers seem to be improving.
Analyst Simeon Gutman commented, "We stay UW TGT believing Q2 results bring the bear case into greater focus. Q2 is the second quarter in a row of comp underperformance and pushes TGT further away from its LT comp goal of 3%. We are skeptical TGT can generate sustainable 3% comps which undermines its 10.5% EBITDA margin goal and the ultimate earnings power/free cash flow of the business. This makes TGT susceptible to negative earnings revisions and valuation derating in the future."
Shares of Target closed at $70.63 yesterday.
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Create E-mail Alert Related CategoriesAnalyst Comments, Analyst EPS Change, Analyst PT Change
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