Target Beats On The Top And Bottom Lines

Target Corporation (Ticker Symbol: TGT) reported better than expected earnings and revenue for the quarter before the opening bell.  The Minneapolis, Minn.-based company reported an earnings per share beat of $1.36 cents per share vs. Wall Street analysts’ expectations of $1.19 cents per share.  Additionally, Target reported a revenue beat of $18.67 billion vs. Wall Street analysts’ expectations of $18.49 billion.  The company also reported same-store sales that showed a growth of 4.5% vs. Wall Street analysts’ expectations of growth of 3.6%.

Target saw its digital sales increase by over 30% for the quarter, led by same-day delivery options and in-store and curbside pickup accounting for the majority of online sales growth.

The company said that its overall customer traffic increased by 3.1% for the quarter and the average transaction per customer grew by 1.4%.

Target also increased its full-year earnings per share guidance from $5.90 to $6.20 to the new range of $6.25 to $6.45.  This was higher than the earnings per share of $6.18 that Wall Street analysts’ that have been calling for.

The above image is a chart of Target’s stock price over the past twelve months.  The stock started off in 2019 to a solid start rallying nearly 30% in the first four months.  After a minor pullback in the second quarter of 2019, the stock began rally led by a positive earnings release.  Over the next three months, the stock proceeded to trade within a horizontal channel. Horizontal channels are areas of indecisiveness between buyers and sellers and the stock is a point at which supply and demand are relatively balanced.

After finding some dynamic price support at its 100-day moving average, the stock gapped up higher out of its horizontal channel, led by a solid third-quarter earnings release. Over the next three months, the stock traded in an ascending triangle pattern. The stock broke out from that pattern on its earnings release from this week, gapped higher, and traded to an all-time high of $126.06.  The theme of 2019 has been an earnings gap higher then consolidation for a time after.  We will see if that continues.

Traders who are bullish on Target should watch the MACD buy signal and its crossing of the zero-line for a possible move back higher to retest its all-time high of $126.06.

Traders who are bearish on Target should watch for a potential move back below its earnings day low of $118.36 for a possible move down to its previous breakout point around the $115.00 price level.

(Chart above courtesy of ​​)

Based on a survey of 23 analysts offering 12-month price targets, the average price target for Target’s stock is $118.89. According to that number, the stock is priced at a premium relative to Wall Street’s analysts and could be considered overvalued around current levels near $124.57.

Investors in the retail space should look to Walmart’s (Ticker Symbol: WMT) earnings release on February 18th for fresh news within the retail sector.


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