Target’s Shares Fall Pre-Market Despite Q2 Results Exceeding Expectations

Shares of Minnesota-based retail giant Target (TGT) were down 2.2%, at the time of writing, in early trade on Wednesday even after the company reported robust financial results for the second quarter of 2021. Target’s stores offer food products and general merchandise across all U.S. states and the District of Columbia.

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Adjusted earnings per share (EPS) grew nearly 8% year-over-year to $3.64, beating the Street’s estimate of $3.49 per share. Total revenues increased 9.5% to $25.2 billion, just above analysts’ expectations of $25.08 billion.

Sales grew 9.4% year-over-year to $24.8 billion and other revenue surged 20% to $334 million. Store comparable sales rose 8.7%, while Digital comparable sales went up 10%. Furthermore, Target’s stores fulfilled over 95% of its second-quarter sales.

The Chairman and CEO of Target, Brian Cornell, said, “Even after unprecedented growth over the last two years, we see much more opportunity ahead of us, and we’re leaning into opportunities to invest in the long-term growth and resiliency of our business. Our team and operating model can seamlessly adapt to changes in the environment, and we’re well-positioned to deliver outstanding performance in the back half of the year.”

For the second half of 2021, the company expects comparable sales growth in high single digit, which is near the high end of the guidance range provided earlier. (See Target stock chart on TipRanks)

Last week, Telsey Advisory analyst Joe Feldman maintained a Buy rating on the stock and raised the price target to $305 from $265 (23.6% upside potential).

Ahead of the second-quarter results, the analyst said, “We are raising our Q2 estimates to reflect continued strong consumer spending trends, partly helped by U.S. government stimulus, benefits from a more favorable product mix, and gains from company-specific initiatives, like fresh grocery via Drive Up and Shipt. In our view, Target won millions of new customers during COVID-19, which combined with deeper relationships with existing customers, should help the company continue to gain market share.”

Overall, the stock has a Strong Buy consensus rating based on 14 Buys and 4 Holds. The average Target price target of $260.76 implies 5.5% upside potential. The company’s shares have gained 86% over the past year.

According to TipRanks’ Smart Score rating system, Target scores a “Perfect 10,” suggesting that the stock is likely to outperform market averages.