Target (TGT) Stock Surges 15% on EPS and Outlook Beat,, Analysts Impressed

Shares of Target (NYSE: TGT) are up nearly 15% in premarket trading Tuesday after the company reported Q4 results.

Target posted adjusted EPS of $3.19 in the fourth quarter, well above the consensus estimates of $2.88 per share. The company generated sales of $30.62 billion in the period, missing the analyst consensus of $31.16 billion.

Comparable sales grew by 8.9%, missing the estimated growth of 10.4%. Comparable digital sales were up 9.2% in the quarter, significantly below the estimated 28.1% growth. The gross margin in Q4 was reported at 25.7%, compared to the analyst consensus of 25.3%.

Target reported Q4 EBITDA of $2.81 billion, up 14% YOY and above the analyst expectations of $2.54 billion. Operating income stood at $2.10 billion, compared to the consensus estimates of $1.87 billion.

For the full fiscal year, Target expects low- to mid-single digit revenue growth and high-single digit growth in adjusted EPS. The company also expects an operating margin rate of 8 percent or higher and low-single digit growth in operating margin dollars.

"Our strong fourth-quarter performance capped off a year of record growth in 2021, reinforcing the durability of our business model and our confidence in long-term profitable growth," said Brian Cornell, chairman and CEO of Target.

Goldman Sachs analyst Kate McShane says TGT delivered a “solid 4Q and better than expected FY22 guide.”

“We expect the stock to trade higher on solid 4Q results and better than expected 2022 guidance,” McShane said.

Cowen analyst Oliver Chen reiterated an Outperform rating as he continues to see Target “as one of top pandemic winners.”

“With the latest step up in wages, TGT is positioning itself to be the wage leader in every market it operates. 4Q21 came in above expectations on better EBIT margin, while comps slightly missed our already lowered expectations as the environment slowed during the quarter,” Chen said in a client note.

By Senad Karaahmetovic | [email protected]

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