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Target (TGT) PT, Estimates Cut at Buckingham Research Following Miss

January 18, 2017 10:19 AM EST
Get Alerts TGT Hot Sheet
Price: $167.59 +2.05%

Rating Summary:
    25 Buy, 19 Hold, 1 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 8 | Down: 2 | New: 35
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Buckingham Research analyst John Zolidis lowered estimate and his price target Buy-rated Target (NYSE: TGT) to $77.00 (from $85.00) following the retailer's holiday update and lower Q4 guidance.

Zolidis commented, "We are maintaining our BUY rating on shares of Target Corp. but cutting our PT to $77 from $85. Our investment case for TGT revolved around the company’s ability to offset pressure from e-commerce encroachment, a promotional environment, and choppy consumer spending and still generate improving ROIC and ROE trends from strong capital allocation discipline. Unfortunately, this has not come to pass as weakness at retail offset benefits from new product introductions and TGT’s own strong growth in e-commerce. We are taking a much more conservative view on future results and now believe it’s reasonable to start with the assumption that TGT may never generate a positive annual comp again, or at least not before the e-commerce channel matures. In this admittedly dire scenario, we still see value in TGT shares, notably the company’s ownership of nearly all its real estate (we estimate this is worth more than the equity value) and robust FCF (averaging ~$5.50/share going forward) which the company returns to investors via dividends or share repurchase. We are keeping the BUY but now acknowledge the stock may be more of a trading vehicle than LT hold, which is a much less compelling investment case."

The firm cut FY 2016 EPS from $5.22 to $5.07, FY 2017 EPS from $5.45 to $5.05 and FY 2018 EPS from $5.81 to $5.13.

For an analyst ratings summary and ratings history on Target click here. For more ratings news on Target click here.

Shares of Target closed at $70.94 yesterday.



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