Big-box retailer Target (NYSE:TGT) is scheduled to announce its results for the first quarter on Wednesday, May 22. The pressure on consumer discretionary spending could continue to pose challenges for the company’s top-line growth. However, cost-saving initiatives and disciplined inventory management might have supported TGT’s earnings to some extent.
According to the TipRanks Stock Analysis tool, “Bulls Say, Bears Say,” analysts bullish on TGT believe that the company’s delivery costs are significantly lower than the traditional delivery model and could aid in margin expansion.
Against this backdrop, let’s delve into analysts’ Q1 expectations.
TGT – Q1 Expectations
Wall Street expects Target to report sales of $24.52 billion in Q1, down about 3% year-over-year. Meanwhile, analysts expect TGT to post earnings of $2.06 per share, compared with $2.05 in the prior-year quarter.
Looking at management’s expectations, Q1 comparable sales are expected to decline by 3% to 5% sequentially. Also, the company expects its adjusted EPS to be in the range of $1.70 to $2.10.
Analysts Have Mixed Opinions Ahead of Q1
Prior to the company’s Q1 earnings release, four analysts rated TGT stock a Buy, while three assigned a Hold rating.
Top-rated analyst Paul Lejuez from Citi upgraded the stock’s rating to Buy from Hold on May 7. The analyst noted that Target is one of the retail sector’s winners and has the potential to boost its EBIT (earnings before interest and taxes) margin. Lejuez’s price target of $180 implies an upside potential of 14.9% from the current level.
Website Traffic Shows Growth
Investors can use TipRanks’ Website Traffic Tool to gain insights into a company’s upcoming earnings report. The tool offers information on how a company’s website domain performed over a specific time frame.
According to the tool, total visits to target.com grew 11.1% year-over-year in Q1. The rise in traffic indicates that the demand for the company’s products remained strong during the quarter.
Learn how Website Traffic can help you research your favorite stocks.
Is TGT a Good Buy Now?
Overall, Wall Street is cautiously optimistic about the stock. TGT has a Moderate Buy consensus rating based on 19 Buy and nine Hold recommendations. The analysts’ average price target on Target stock of $186.96 suggests an upside of 19.3%.
Insights from Options Trading Activity
It’s worth noting that options traders are pricing in a +/- 7.75% move in TGT stock on earnings, smaller than the previous quarter’s earnings-related move of 12.02%.
The anticipated move is determined by computing the at-the-money straddle of the options closest to the expiration after the earnings announcement.
Learn more about TipRanks’ Options tool here.
Bottom Line
Weak discretionary spending by consumers due to ongoing macro pressures and increasing competition in the retail sector remain key headwinds to Target’s performance. However, TGT’s cost-control measures and value pricing strategy are encouraging and might have supported Q1 results to some extent.
