On Wednesday, RBC Capital adjusted its outlook on Target Corporation (NYSE:TGT), increasing the price target to $191 from $157, while reaffirming an Outperform rating on the stock. The firm's analyst highlighted Target's potential to achieve earnings per share (EPS) at the higher end, or possibly beyond, its fiscal year 2024 guidance range.
The analyst's optimism is rooted in several factors. Firstly, discretionary sales are showing signs of stabilization. Additionally, the company is expected to face easier comparable sales metrics after the first quarter. Lastly, freight and transportation costs are anticipated to continue providing a gross margin tailwind as Target benefits from lower contract rates year over year.
RBC Capital's forecast for Target's comparable sales growth remains steady at 0.6% for fiscal year 2024, aligning with the company's own guidance of 0-2%. However, the EPS estimate has been slightly adjusted to $9.46 from the previous $9.53, while still falling within Target's guided range of $8.60 to $9.60.
Looking ahead, RBC Capital has also introduced its fiscal year 2025 estimates for Target. The firm expects comparable sales to grow by 3.3% and EPS to reach $10.60. The new price target of $191 is based on an approximate 18 times multiple of the firm's fiscal year 2025 EPS estimate. The analyst concluded by reiterating an Outperform rating, signaling confidence in Target's performance moving forward.
InvestingPro Insights
As RBC Capital positions Target Corporation (NYSE:TGT) for robust future performance, real-time data from InvestingPro provides a deeper look into the company's financial health and market sentiment. The latest metrics show Target with a substantial Market Cap of $77.83B, indicating the company's significant presence in the retail sector. A current P/E Ratio of 16.83 suggests that investors may find the stock's valuation attractive, especially when considering Target's history of consistent dividend growth. In fact, one of the InvestingPro Tips highlights that Target has raised its dividend for 53 consecutive years, a testament to its financial stability and commitment to shareholder returns.
Another InvestingPro Tip to consider is the stock's recent performance, with a significant return over the last week, showing a 1 Week Price Total Return of 11.32%. This short-term uptick aligns with the analyst's positive outlook and could reflect market anticipation of continued earnings strength. It's worth noting that Target is also trading near its 52-week high, with a price that is 98.45% of the peak value, signaling investor confidence in the company's near-term prospects.
For readers interested in more in-depth analysis and additional metrics, InvestingPro offers a more extensive list of InvestingPro Tips, with more insights into Target's financials and market performance. By using the coupon code PRONEWS24, readers can get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, unlocking a wealth of information to guide investment decisions.
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