NEW YORK (TheStreet) -- Target(TGT) - Get Report shares are declining, down 0.3% to $72.84 in trading on Wednesday, after a judge ruled that the retailer will have to face civil suits over the company's handling of a data breach that allowed hackers to steal millions of customers' account data from the retailer last year.
The company had petitioned the court to block claims by five banks who came together to sue the retailer on behalf of the financial institutions who claimed that the data breach cost them tens of millions of dollars in damages due to the retailer's negligence.
Watch the video below for more on the suit against Target:
Over 40 million credit cards were exposed in the cyber attack along with up to 110 million customer email addresses and phone numbers, affecting shoppers who frequented the store between November 27 and December 15, 2013.
Judge Paul Magnuson ruled that the plaintiffs were within their rights to sue because Target had not put into place security measures sufficient to stop the cyber attack. "Although third-party hackers' activity caused harm, Target played a key role in allowing the harm to occur," the judge said.
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 number of 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. The company's strengths can be seen in multiple areas, such as its revenue growth, increase in stock price during the past year, increase in net income, growth in earnings per share and largely solid financial position with reasonable debt levels by most measures. We feel these strengths outweigh the fact that the company has had somewhat disappointing return on equity."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- TGT's revenue growth has slightly outpaced the industry average of 4.0%. Since the same quarter one year prior, revenues slightly increased by 2.7%. This growth in revenue appears to have trickled down to the company's bottom line, improving the earnings per share.
- The stock has risen over the past year as investors have generally rewarded the company for its earnings growth and other positive factors like the ones we have cited in this report. Looking ahead, the stock's rise over the last year has already helped drive it to a level which is relatively expensive compared to the rest of its industry. We feel, however, that the other strengths this company displays justify these higher price levels.
- The net income growth from the same quarter one year ago has exceeded that of the Multiline Retail industry average, but is less than that of the S&P 500. The net income increased by 2.9% when compared to the same quarter one year prior, going from $341.00 million to $351.00 million.
- TARGET CORP's earnings per share improvement from the most recent quarter was slightly positive. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in 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 ($3.25 versus $3.07).
- TGT's debt-to-equity ratio of 0.87 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further.
- You can view the full analysis from the report here: TGT Ratings Report