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Bear of the Day: Target (TGT)

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It’s no secret that the brick-and-mortal retail crowd has been struggling in the face of increased online sales. As a result, we’ve seen several stocks get beat down in the wake of their earnings reports. When it comes to today’s Bear of the Day, they are in a fight against online and some familiar foes.

Target (TGT - Free Report) has the dubious honor of being today’s Bear of the Day. Target Corporation operates as a general merchandise retailer. It offers household essentials, including pharmacy, beauty, personal care, baby care, cleaning, and paper products; dry grocery, dairy, frozen food, beverages, candy, snacks, deli, bakery, meat, produce, and pet supplies; and apparel for women, men, boys, girls, toddlers, infants, and newborns, as well as intimate apparel, jewelry, accessories, and shoes. The company also provides home furnishings and décor, such as furniture, lighting, kitchenware, small appliances, home décor, bed and bath, home improvement, and automotive products, as well as seasonal merchandise, such as patio furniture and holiday décor; music, movies, books, computer software, sporting goods, and toys, as well as electronics, such as video game hardware and software

Target is coming in at a Zacks Rank #5 (Strong Sell) in a sector that ranks dead last in our Zacks Sector Rank. A big reason for the rank is six analysts have dropped their earnings estimates for the current quarter and next year. The bearish attitude has brought the Zacks Consensus Estimate for the current quarter down from $1.35 to 89 cents. Next year’s number is even more bleak, with our Zacks Consensus Estimate going from $5.87 to $3.95. That number now represents a year-over-year contraction in earnings.

It should come as no surprise that the stock has come under pressure over the last year. For most of 2016, the $65 price handle provided some support. That level was broken in mid-January but shares rallied above that critical level ahead of the last earnings report. Earnings brought with it some bad news and TGT crumbled, falling to fresh 52-week lows yesterday below $54. The 50-day moving average sits well above the current price action at $63, confirming the bearish trend here.

Investors looking for other stocks in the same industry should look at Zacks Rank #2 (Buy) Burlington Stores (BURL - Free Report) . There are several Zacks Rank #3 (Hold) stocks to investigate further including Big Lots (BIG - Free Report) and Dollar General (DG - Free Report) .

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