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Target stock gets Buy reaffirmation at Jefferies, sees price cuts supporting sales growth

EditorAhmed Abdulazez Abdulkadir
Published 10/22/2024, 01:03 PM
TGT
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On Tuesday, Jefferies reaffirmed its Buy rating and $195.00 price target on Target Corporation (NYSE:TGT), following the retailer's announcement of price reductions on an additional 2,000 items. This latest round of price cuts spans various product categories, including both discretionary items and essentials, and affects a mix of national and private label brands.

Earlier in the day, Target disclosed its strategy to lower prices on a significant number of products. With these recent adjustments, the total number of price reductions at Target this year has reached 10,000. The move is part of Target's efforts to bolster consumer traffic and sales as the Holiday season approaches.

The analyst from Jefferies has interpreted these price cuts as a favorable development for Target's comparable sales. Historically, such pricing strategies have been associated with an uptick in customer visits and spending at the retailer's stores and online platforms.

The analyst reiterated the estimates and the Buy rating, indicating confidence in Target's performance. The emphasis on competitive pricing is expected to play a key role in the company's strategy to attract and retain customers, especially during the critical shopping period leading up to the end of the year festivities.

In other recent news, Target has made significant strides on several fronts. The company has announced a major price reduction on thousands of items in preparation for the holiday season. This move is part of Target's strategic decision to offer more affordable shopping options in response to cautious consumer spending. Target's pricing strategy has led to its first rise in quarterly comparable sales in more than a year and an increase in its profit forecast for the full year.

In executive news, Target has appointed Jim Lee as its new Chief Financial Officer. Lee, who brings 26 years of experience from PepsiCo (NASDAQ:PEP), is expected to provide valuable expertise, particularly in the Food & Beverage sector. Jefferies has sustained its buy rating on Target shares, citing Lee's appointment, while TD Cowen maintains a hold rating.

Target reported strong Q2 results, with a 2% increase in comparable sales and a remarkable 42% surge in earnings per share, reaching $2.57. The company also announced a quarterly dividend of $1.12 per common share and completed a $750 million notes sale in an underwritten agreement with Deutsche Bank Securities Inc., J.P. Morgan Securities LLC, and Wells Fargo Securities, LLC. These recent developments reflect Target's ongoing commitment to its strategic initiatives and financial stability.

InvestingPro Insights

Target's recent price reduction strategy aligns with its position as a prominent player in the Consumer Staples Distribution & Retail industry, as highlighted by InvestingPro Tips. The company's ability to maintain competitive pricing while sustaining profitability is reflected in its P/E ratio of 15.35, which is relatively low compared to its near-term earnings growth potential.

InvestingPro Data shows that Target's revenue for the last twelve months stands at $107.3 billion, with a gross profit margin of 28.42%. This financial strength supports the company's aggressive pricing strategy aimed at driving customer traffic and sales. Additionally, Target's dividend yield of 2.97% and its impressive track record of raising dividends for 54 consecutive years, as noted in InvestingPro Tips, may appeal to value-oriented investors.

The analyst's Buy rating and $195.00 price target are further supported by InvestingPro's fair value estimate of $175.44, suggesting potential upside from the current price. Investors seeking more comprehensive analysis can access 9 additional InvestingPro Tips for Target, providing a deeper understanding of the company's financial health and market position.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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