After the beating that Walmart Inc (ticker: WMT) stock took following its disappointing fourth-quarter earnings report, Target Corporation ( TGT) investors may be a bit worried ahead of their own earnings report and analyst day on Tuesday. However, analysts are optimistic about Target’s fourth-quarter numbers and say long-term investors can look forward to a strong year from the retailer.
Consensus anaysts estimates are calling for earnings per share of $1.38 on revenue of $22.53 billion. Those numbers would represent a 4.8 percent EPS decline and an 8.8 percent increase in revenue.
In January, Target raised its guidance and said it expects comparable-store sales growth of 3.4 percent for the quarter, in line with its reported growth in November and December. In the third quarter, comparable-store sales were up 0.9 percent, but they remain negative overall for the first three quarters of 2017.
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Digital sales were up 24 percent in the third quarter. Walmart’s online sales growth dropped from 50 percent in the third quarter to just 23 percent in the fourth quarter, sending shares of Walmart stock tumbling more than 15 percent in the past 10 days.
Bank of America analyst Robert Ohmes says Target investors have nothing to fear in the fourth quarter. Bank of America is forecasting a slight EPS miss of $1.35 on 3.4 percent comparable-store sales growth. Ohmes expects Target’s online sales growth to decline modestly to 20 percent.
Ohmes says investors shouldn’t expect anything new on Tuesday that will change his long-term bullish outlook for Target.
“We believe the company should benefit from the discount store cycle that we expect will play out over the next five to 10 years,” Ohmes says. “TGT’s efforts to turn around its US business should accelerate in 2018 and result in market share gains longer-term.”
Credit Suisse analyst Seth Sigman is also bullish on Target stock ahead of earnings. After a year of playing catch-up and making strategic investments and changes, Sigman says Target has set the stage for stronger sales comparisons.
“We would expect the analyst day to be more forward looking, focusing on initiatives in the box, including remodel work, merchandising improvements, e-commerce growth and omni-channel fulfillment enhancements,” Sigman says.
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Bank of America has a “buy” rating and $86 price target for Target. Credit Suisse has an “outperform” rating and $86 target for TGT stock.
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Target Earnings Preview: Online Sales in Focus originally appeared on usnews.com
