Back to top

Analyst Blog

Zacks Investment Research downgraded Target Corp. (TGT - Analyst Report) to a Zacks Rank #5 (Strong Sell) on Jan 15.

Why the Downgrade?

Target has witnessed sharp downward estimate revisions after the public acknowledgement of the massive security breach that affected nearly 70 million customers and the subsequent trimming of its fourth-quarter fiscal 2013 guidance. The company’s stock price hit a 52-week low of $59.87 on Jan 17, 2014. Since the announcement of the breach, Target has lost 3.1% of its market capitalization.

The company now expects adjusted earnings per share for its U.S. segment in the range of $1.20 to $1.30, compared with the previous projection of $1.50 to $1.60. Further, comparable store sales are expected to decline 2.5% in the fourth quarter as against flat comps forecasted earlier.

Target faced its worst security breach when information related to credit and debit card holders were hacked. The theft occurred during the holiday season, from a day before Thanksgiving up to Dec 15. The company publicly recognized the breach four days later on Dec 19, 2013.

Recently, as part of the ongoing inquiry, Target had disclosed that the data theft included names, mailing and email addresses as well as phone numbers. Notably, the company has extended help to aggrieved customers by offering one year of complimentary credit monitoring and identity theft safeguard. Target’s customers have three months to register for the program.

Moreover, Target, as per media reports, has been slapped with several lawsuits in the past few days over the fallout from the security breach, thereby increasing its legal woes. We feel more troubles could brew for the specialty retailer ahead.  

The Zacks Consensus Estimate for fiscal 2013 decreased 16.1% to $3.23 per share over the last 60 days. For fiscal 2014, most of the estimates were revised downward, over the last 60 days, dragging the Zacks Consensus Estimate by 10.3% to $4.43 per share.

Other Stocks to Consider

Some better-ranked retail stocks worth considering for investment purpose include Barnes & Noble, Inc. (BKS - Snapshot Report), Kirkland's Inc. (KIRK - Analyst Report) and The TJX Companies, Inc. (TJX - Analyst Report). While Barnes & Noble and Kirkland's sport a Zacks Rank #1 (Strong Buy), TJX Companies carries a Zacks Rank #2 (Buy).

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
SIGNET JEWE… SIG 116.37 +7.72%
CHYRONHEGO… CHYR 2.72 +5.84%
US SILICA H… SLCA 70.72 +4.00%
MALLINCKROD… MNK 80.11 +2.32%
RF MICRO DE… RFMD 11.76 +2.31%