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Target jumps on strong EPS upside, better-than-feared guidance; analysts flag low expectations

Published 08/16/2023, 06:44 AM
Updated 08/16/2023, 09:01 AM
© Reuters Target (TGT) jumps 9% on better-than-feared results, guidance
TGT
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Target (NYSE:TGT) shares rose 7.5% in early Wednesday trade after the company reported results for its second quarter.

Target's comparable sales experienced a decline of 5.4% in the second quarter, worse than the expected 3.8% decline. Revenue reached $24.8 billion, a decrease of 4.9% compared to the previous year and below the expected $25.33B.

Gross margin improved to 27%, surpassing last year's 21.5% and exceeding the estimated 25.6%.

Adjusted earnings per share came in at $1.80, easily ahead of the expected $1.47.

Brian Cornell, chair and chief executive of Target Corporation, said, "Our second quarter financial results clearly demonstrate the agility of our team and the resilience of our business model, as we saw better-than-expected profitability in the face of softer-than-expected sales.”

“With the benefit of a much-leaner inventory position than a year ago, the team was able to quickly respond to rapidly-changing topline trends throughout the second quarter, while continuing to focus on the guest experience."

For this quarter, the company anticipates its adjusted EPS to be in the range of $1.20 to $1.60. Analysts were looking for $1.84.

For FY24, Target revised its prior EPS range of $7.75-8.75 to $7.00-8.00, with the midpoint of the new range coming in below the expected $7.81.

Analysts were widely expecting Target to lower its guidance with the delivered cut seen by the market as better than feared.

RBC analysts said the market was already pricing in guidance cut.

"Revised guidance calling for a ~MSD decline in 2H implies that trends haven't meaningfully improved, but could be conservative as mgmt looks to set a floor. All in all, barring any negative surprises on current comp trends, we think there's enough here to get shares moving in the right direction," they said in a note.

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Citi analyst added:

"Given that sentiment has become more negative recently, we expect the stock to be up on a guidance revision that was not as bad as feared."

Latest comments

target? the one store where people quit left and right and you go to the store to cashier and a 2 miles line to pay
Wall Street controls the game whoever short sell target before earnings
this thing will drop like a stone once the market opens, the earnings are HORROBLE and the makret rn is UNSTABLE
Wonderful news... lowered guidance, lowered earning forecast...worse than last year result......and stocks rally.......
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