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Target Falls on Big EPS Miss, Analyst Says Results are 'Disappointing'

Published 08/17/2022, 08:35 AM
Updated 08/17/2022, 08:58 AM
© Reuters.  Target (TGT) Falls on Big EPS Miss, Analyst Says Results are 'Disappointing'

By Senad Karaahmetovic

Shares of Target (NYSE:TGT) are down nearly 3% after the retailer reported Q2 results that missed the average analyst estimate.

Target delivered an adjusted EPS of $0.39, a big miss compared to the consensus of $0.72. Sales came in at $25.65 billion, again lower than the estimate of $25.84 billion. The gross margin was reported at 21.5% while analysts were looking for 23.9%.

The company reiterated its prior view of full-year revenue growth coming "in the low- to mid-single digit range".

"While the company is planning cautiously for the remainder of the year, current trends support the company’s prior guidance for full-year revenue growth,” Target added.

A JPMorgan analyst commented that said results were “neutral”.

“Net-net, there are a number of cross currents in TGT’s release that we view positively although as we noted for LOW earlier there could be remnant topline risk in 2H. Indeed, comps were in-line and a little better than our previewed 2% bar but GM and EPS were much worse. We believe the right way to interpret that is that inventories are clean,” he said in a client note.

A Goldman Sachs analyst noted a Q2 miss, driven by weaker gross margins.

“We expect the stock to trade lower due to the 2Q miss (given two previous guide downs) and still elevated inventory, but note the positive top line trends including traffic growth and unit share gains along with reiterated guidance,” she wrote in a note.

For a Stifel analyst, the Q2 results were “disappointing”, although he is more positive on the guidance front.

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“Maintained F2H guidance indicates the company expects a meaningful improvement in trends, and which we view as most notable and important for investors suggesting greater management visibility. We anticipate TGT shares are unlikely to move materially on the result.”

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