TGT

More complicated scenarios could be related with Target stock recovery after the chain of hypermarkets surprisingly generated only $1.85 of quarterly EPS (equity per share) vs $2.10 in the same period of 2024, $2.57 in Q2 2024 and $2.30 in consensus projections for the recent quarter. The revenue of 25.67 billion was only slightly lower but mostly in line with average forecasts around $25.87 billion. This means that the discount policy was good enough in maintaining sales, not profits. Potential dip buyers and mid-term bulls may be terrified by currently entering into Black Friday, then Cyber Monday and finally launching the Christmas season, with growing chances of exacerbating the overall pattern. Target CEOs commented on potential holiday quarter sales by revealing their profit forecast of $1.85 to $2.45 per share, compared to the Wall Street's analyst pool hopes for $2.66 per share, with flat comparable sales projections YoY, instead of consensus bets for 1.64% gains.

"We are seeing the consumer become increasingly resourceful and strategic on how they shop," the chief commercial officer at Target, Rick Gomez, said, following the chain's cutting its prices on thousands of essential and gift items, as well as food, beverages and toys. According to Gomez, only apparel sales were weaker than normally with warmer-than-usual weather across the United States. Spending on other items was strong but the seller probably benefited from lower prices less than consumers did. Again, persistent weakness in selling higher-margin items like home decor and electronics is still here for Target when more families are watching their budgets.

While Amazon, Walmart or even TJX are performing better plus raising their inner predictions for holidays, Target looks to be more careful by moderating its 2024 forecast to between $8.30 and $8.90 in terms of EPS (equity per share) from its own previously forecasted range of between $9.00 and $9.70.

Shopper visits were O.K. to gain 2.4% in the last three months ended November 2, with a 10.8% jump in digital sales being also detected. This means that consumers still love shopping in Target, and so the root cause of solving trouble with earnings lies in price policy and may be logistics. "We encountered some unique challenges and cost pressures that impacted our bottom-line performance," Target CEO Brian Cornell said. He mentioned a three-day strike of U.S. dock workers and port operators in early October to partially shut down shipping on the East Coast and Gulf Coast, so that Target had to carry additional costs to reroute some shipments before the key season.

We think this promises the transitory nature of unearned profits, with Target share price to recover sooner than later. Yet, the stock may first come through re-testing of a below $120 area, plus potentially 3 to 6 more months wait for renewal of the crowd's enthusiasm, before coming back to $150+ and then targeting $180+ again.