Target (TGT) Beat Estimates as Digital Sales Soar But Offers No Guidance, Analyst Positive

March 2, 2021 8:57 AM EST
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Target (NYSE: TGT) reported better-than-expected earnings for its fourth-quarter but it didn’t offer EPS or revenue guidance for 2021.

Shares of the retail giant are trading 0.5% higher in pre-open Tuesday.

The company saw its earnings soar 58% to $2.67 per share to beat the $2.54 expected from market analysts. Revenue was reported at $28.34 billion, again higher than the $27.5 billion the market expected.

Same-store sales jumped by 20.5% (vs 17.5% expected), while digital sales exploded 118%.

Citing Covid-related uncertainty, the company offered no guidance.

"Following years of investment to build a durable, scalable and sustainable business model, we saw record growth in 2020, as our guests turned to Target to safely provide for their families throughout the pandemic," said Brian Cornell, chairman and chief executive officer of Target Corporation.

"With the strength of our unique, multi-category assortment and the flexibility we offer through our reliable and convenient fulfillment options, we gained nearly $9 billion in market share in 2020, and grew our revenue by $15 billion, which is more than the 11 prior years combined. As we look ahead to 2021 and beyond, we see continued opportunity to invest in our business and our team, building on the strong foundation we've established to drive market share gains and deliver profitable growth for years to come."

BMO analyst Kelly Bania praised an “incredibly strong finish to the year.” The analyst is also not surprised that TGT offered no guidance. On soaring same-store sales, Bania said:

“This suggests a very strong acceleration during the typically low-volume month of January (presumably boosted by consumer stimulus) as holiday comps for November and December were reported as 17.2% in early January. Fourth-quarter digital sales grew +118% (vs. our 105% forecast) with same-day services continuing to lead the pace of growth (+212%),” she wrote in a note to clients.

“Note that TGT's starting wage for all U.S. hourly employees is already at $15, leaving TGT ahead in terms of the need for wage investment (note: Costco recently raised its minimum wage to $16). Consensus EPS is at $8.80 for FY2022, down 7% YoY from FY2021's strong levels during which TGT added $15 billion of sales.”

BMO rates TGT as “Outperform” with a price target set at $185.

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