Target Corporation Set to Report First-Quarter Earnings Amid Challenges
Minneapolis-based Target Corporation (TGT) is a major general merchandise retailer, providing a wide array of products including apparel, accessories, pet supplies, food, appliances, and home decor. With a market capitalization of nearly $43.6 billion, Target ranks among the largest discount retailers in the United States.
Upcoming Earnings Report and Analyst Expectations
Target is scheduled to announce its first-quarter results on Wednesday, May 21, before the market opens. Analysts predict that TGT will report an adjusted EPS of $1.76, reflecting a 13.3% decline from the $2.03 recorded in the same quarter last year. Although Target has missed analysts’ bottom-line estimates twice over the past four quarters, it has exceeded expectations on two other occasions.
Fiscal Year Projections
For fiscal 2025, TGT is expected to achieve an adjusted EPS of $8.95, which is a slight increase of 1% from the $8.86 reported in fiscal 2024. Looking ahead to fiscal 2026, earnings are projected to rise 7.5% year-over-year to reach $9.62 per share.
Stock Performance and Market Comparison
TGT shares have declined 41.5% over the past year, significantly underperforming the S&P 500 Index’s ($SPX) 8.4% gains and the Consumer Staples Select Sector SPDR Fund’s (XLP) 6.6% returns in the same period.
Impact of Recent Quarterly Results
Despite reporting financial results that surpassed expectations, Target’s stock fell 3% following the release of its Q4 results on March 4. The company experienced a notable increase in sales of toys, electronics, and apparel, contributing to a 1.5% rise in comparable sales. However, Q4 2023 consisted of 14 weeks, one more than Q4 2024, which generated approximately $1.7 billion in additional sales. As a result, net sales for the quarter decreased by 3.1% year-over-year, totaling $30.9 billion, although this figure slightly exceeded market expectations. Additionally, TGT’s adjusted EPS fell 19.1% year-over-year to $2.41, still surpassing consensus estimates by 7.1%.
Future Outlook and Analyst Sentiment
Given the current economic uncertainties and the impact of tariffs on inflation, Target anticipates pressure on its topline throughout fiscal 2025. According to the company’s guidance, comparable sales are projected to remain flat, with total revenue growth expected to hover around 1%, which has raised concerns among investors.
Despite these challenges, the consensus outlook for TGT is cautiously optimistic, maintaining a “Moderate Buy” rating overall. Among the 35 analysts covering TGT, the breakdown of recommendations includes 12 “Strong Buys,” two “Moderate Buys,” 20 “Holds,” and one “Strong Sell.” As of now, the stock is trading well below its average price target of $131.14.
On the date of publication, Aditya Sarawgi had no direct or indirect positions in any of the securities mentioned in this article. All information and data presented are for informational purposes only.
The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.
