Target (TGT) Stock Up After BMO Capital Increases Price Target

NEW YORK (TheStreet) -- Shares of Target Corp. (TGT) are higher by 0.05% to $79.43 after BMO Capital Markets increased its price target to $85 from $82 and maintained its "market outperform" rating for the Minneapolis-based retail company.

Target released its first quarter earnings on May 20, with net income rising 51.6% to $635 million, or $1.10 per share, beating BMO Capital Markets' estimate of $1.04 per share.

The retailer reported revenue of $17.12 billion, compared to revenue of $17.05 billion during the same period a year ago.

"Earnings were driven by comp-store sales growth of 2.3%, which importantly comprised sequential growth in both transaction +0.9% and ticket +1.4%, with Signature categories driving outsized comps (Beauty +5%, Apparel and Home +4%) on a one- and two-year basis-implying growth was not just on an easy comparison," said BMO analyst Wayne Hood. "As expected, mid-single-digit declines in electronics continue to be a drag on results as it is with other retailers."
 
Two consecutive quarters of traffic growth and markedly strong contribution from key Signature categories, along with Target's ability to execute across channels as digital sales continued to grow sharply, at 38%, strengthened BMO's confidence in the efficacy of management's merchandise category segmentation strategy, according to BMO Capital Markets.

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 some important positives, 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, solid stock price performance, growth in earnings per share, increase in net income and reasonable valuation levels. We feel its strengths outweigh the fact that the company shows low profit margins."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • TGT's revenue growth has slightly outpaced the industry average of 2.5%. Since the same quarter one year prior, revenues slightly increased by 2.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 38.10% over the past year, a rise that has exceeded that of the S&P 500 Index. Turning to the future, naturally, any stock can fall in a major bear market. However, in almost any other environment, the stock should continue to move higher despite the fact that it has already enjoyed nice gains in the past year.
  • TARGET CORP has improved earnings per share by 13.5% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. During the past fiscal year, TARGET CORP increased its bottom line by earning $3.83 versus $3.07 in the prior year. This year, the market expects an improvement in earnings ($4.60 versus $3.83).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Multiline Retail industry. The net income increased by 51.9% when compared to the same quarter one year prior, rising from $418.00 million to $635.00 million.
  • You can view the full analysis from the report here: TGT Ratings Report

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