JPMorgan Reiterates Neutral Rating on Target (TGT)
JPMorgan analyst Christopher Horvers reiterated a Neutral rating and $153.00 price target on Target (NYSE: TGT).
The analyst comments "Overall, TGT posted strong results, with $2.57 of EPS well ahead of our $2.24 and the Street’s $2.19 per Consensus Metrix, driven by better-than-expected sales growth and a gross margin beat. Comps came in at +2.0%, ahead of our raised-into-the-print +1.0% and the Street’s +1.2% and at the high end of buy-side expectations, per our conversations, with traffic +3% and all core merchandising categories experiencing traffic growth, led by apparel. Gross margin increased 190 bps YOY to 28.9%, ahead of our and the Street’s 28.0%, driven by cost improvements, favorable category mix, and shrink, that more than offset higher promotional markdowns and fulfillment costs. SG&A deleveraged 30 bps YOY to 21.2%, yielding an operating margin of 6.4%, ahead of our 5.6% and the Street’s 5.5%. EPS grew more than 40% YOY. Overall, comps came in at the high end, and lower product costs offset expected promotional pressure, yielding much better than forecast results. Looking ahead, the guide overall seems prudent not per se conservative. Taking the high end of the EPS range for argument’s sake and applying a 16x multiple gets to $155 while the midpoint is $150. We look to the call to understand the right underlying structural profitability as the past three quarters tell mixed messages with 2Q and 4Q to the positive."
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Shares of Target closed at $144.33 yesterday.