Story updated at 9:50 a.m. to reflect market activity.
Target fell -1.1% to $56.56 in morning trading.
The analyst firm also lowered its EPS estimates for the retailer. The decrease was due to a valuation call.
Separately, TheStreet Ratings team rates TARGET CORP as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:
"We rate TARGET CORP (TGT) a BUY. This is driven by a few notable strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. Among the primary strengths of the company is its solid financial position based on a variety of debt and liquidity measures that we have evaluated. We feel these strengths outweigh the fact that the company has had lackluster performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The debt-to-equity ratio is somewhat low, currently at 0.85, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels. Even though the company has a strong debt-to-equity ratio, the quick ratio of 0.16 is very weak and demonstrates a lack of ability to pay short-term obligations.
- Regardless of the drop in revenue, the company managed to outperform against the industry average of 12.8%. Since the same quarter one year prior, revenues slightly dropped by 5.3%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- TARGET CORP's earnings per share declined by 44.9% in the most recent quarter compared to the same quarter a year ago. The company has suffered a declining pattern of earnings per share over the past two years. However, we anticipate this trend to reverse over the coming year. During the past fiscal year, TARGET CORP reported lower earnings of $3.07 versus $4.53 in the prior year. This year, the market expects an improvement in earnings ($4.00 versus $3.07).
- Net operating cash flow has decreased to $1,767.00 million or 10.62% when compared to the same quarter last year. Despite a decrease in cash flow TARGET CORP is still fairing well by exceeding its industry average cash flow growth rate of -21.85%.
- Current return on equity is lower than its ROE from the same quarter one year prior. This is a clear sign of weakness within the company. When compared to other companies in the Multiline Retail industry and the overall market, TARGET CORP's return on equity is below that of both the industry average and the S&P 500.
- You can view the full analysis from the report here: TGT Ratings Report