Target Blasts Q3 Earnings Forecast With Online Sales Surge: Shares Hit Record High

Target followed its larger rival Walmart with a better-than-expected third quarter earnings report that included an huge 155% year-on-year increase in online sales.

Target Corp.  (TGT) - Get Report shares hit an all time high Wednesday after the retailer posted much stronger-than-expected third quarter earnings, with impressive same-store sale growth, as online pandemic shopping continues to drive the retailer's top and bottom lines.

Target said adjusted earnings for the three months ending in October were pegged at $2.79 per share, a 105% increase from the same period last year that smashed the Street consensus forecast of $1.60 per share. Group revenues, Target said, rose 21.3% to $22.63 billion, again topping analysts' estimates of a $20.9 billion tally.

Target said same store sales rose 9.9%, with overall comparable sales, including digital channels, rising 20.7%, well ahead of the Refinitiv forecast of 11.3%. Comparable digital sales, Target said, rose 155% from last year as online shopping continued to drive transactions amid the coronavirus pandemic.

 "Our strong results in 2020 reflect the benefits of our multi-year effort to build a durable and flexible model, with a differentiated assortment and a suite of industry-leading fulfillment options — all brought to life through the passion and effort of our team," said CEO Brian Cornell. "As a result, we've seen a deepening level of engagement and trust from our guests. The result is unprecedented market share gains and historically strong sales growth, both in our stores and our digital channels." 

"In preparation for the holiday season, we focused first on the safety of our guests and our team, making changes to eliminate crowds while enhancing our fast-growing, contactless options like in-store pickup, Drive Up and Shipt," he added. "In a holiday season that will feel different for our guests, we're committed to helping them navigate the season safely, as they find new ways to celebrate with family and friends."  

Target shares were marked 5% higher in late morning trading following the earnings release to change hands at $171.45 each, extending the stock's six-month gain to around 37%, after hitting an all-time high of $172.12 early in the session.

"Management continued not giving guidance for F2021 as expected. The key investor question for Target, and other big box retailers, is how to comp these phenomenal results next year," said BMO Capital Markets analyst Kelly Bania, who carries an upgraded outperform rating with a $175 price target on the stock. 

"Management noted that they would lift the suspension of their share repurchase program and begin repurchasing shares in 2021," Bania added.