Target (TGT) Accelerating Earnings May 'Carry The Day', but Multiple Looks Stretched - Goldman Sachs

Goldman Sachs maintained a Neutral rating on Target (NYSE: TGT) and raised its price target to $68.00 (from $61.00). The change follows Q3 results and guidance. For now accelerating earnings growth overshadows challenges, said analyst Matthew J. Fassler, but he thinks its multiple looks stretched.

"TGT is experiencing several positive factors: it has the open-ended potential of a new CEO; it handily beat conservative 3Q guidance and Street forecasts; it is about to cycle both the disruption from its payments card breach – suggesting high probability of accelerating US earnings growth; and, it is also moving past its most painful losses in Canada. While little progress is evident in Canada, losses are not getting worse, and TGT today appears much more realistic about problems and prospects for the business. These dynamics are understandably distracting focus from the challenges of online encroachment and investment, the difficulty of weaning the firm off recent alignment with consumables, as suggested by management, and tilting toward core focus categories." said Fassler.

"The reality of accelerating earnings growth seems likely to carry the day, but TGT’s multiple looks stretched, and the company appears to be getting credit for further acceleration, perhaps prematurely," he added.

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 $72.50 yesterday.

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