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Bear of the Day: Target (TGT)

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Target (TGT - Free Report) is a general merchandise retailer with heavy exposure to the discretionary side. Analysts have lowered their expectations across the board following soft quarterly results, landing the stock into an unfavorable Zacks Rank #5 (Strong Sell).

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Can the retail giant get its mojo back? Let’s take a closer look at how it currently stacks up.

Target

Target shares missed the party in 2024, down roughly 4% and widely underperforming relative to the S&P 500. And from the 2024 high, shares have lost more than 20%.

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Image Source: Zacks Investment Research

The company fell short of both consensus EPS and sales estimates in its latest release, also lowering its current fiscal year earnings outlook following the soft results. Cost pressures ate into bottom line performance, with analysts’ downward revisions fully reflective of the development.

The company’s crunched profitability relative to recent periods is illustrated in the chart below. Please note that the chart’s values are tracked on a trailing twelve-month basis.

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Image Source: Zacks Investment Research

The rough share performance has boosted the annual dividend yield, with shares now yielding 3.5% annually. While the high yield may be enticing, investors should approach the stock with great caution until positive earnings estimate revisions roll in.

Bottom Line

Analysts’ negative revisions rolled in following the release of its latest quarterly results, with weak sales continuing to be a thorn in the company’s side.

Target (TGT - Free Report) is a Zacks Rank #5 (Strong Sell), indicating that analysts have taken a bearish stance on the company’s earnings outlook.

For those seeking strong stocks, a great idea would be to focus on stocks carrying a Zacks Rank #1 (Strong Buy) or a Zacks Rank #2 (Buy). These stocks sport a notably stronger earnings outlook and the potential to deliver explosive gains in the near term.


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