$TGT Trading At Key Trendline Support

26 มี.ค. 2020

TGT has sold off to key trendline support and this is a dip worth buying. There's a lot to like with TGT.

Target (NYSE:TGT) says it has been experiencing unusually strong traffic and sales as customers stock up on items like food, medicine, cleaning products and pantry items.

As a result, the retailer is adjusting the expected timing of some of its strategic initiatives, to support the team and minimize potential disruptions in their work. Target now expects to do 130 store remodels in 2020 vs. the previous expectation of ~300 and open 15 to 20 new small format stores this year vs. the 36 previously announced.

Target says comparable sales are more than 20% higher Y/Y in March so far, with comparable sales in essentials and food & beverage up more than 50%. During that same period, comparable sales in apparel & accessories are down more than 20%. The retailer warns that continued sales declines in higher-margin discretionary categories could result in lower-than-expected gross margin dollar performance for the remainder of the quarter.

Target is pulling guidance due to the unusually wide range of potential outcomes for Q1. The company is also suspending share repurchase activity in the current environment.

Credit Suisse digs into Target (TGT -6.7%) after the company was one of the first large retailers to provide an update on financial performance since COVID-19.

CS points to Target's significant sales upside due to essentials/food purchases, but also notes the higher costs that limit the short-term EPS upside.

"These are not data points that can be extrapolated forever, but we believe that the longer-term implications are more positive in our view, given TGT's ability to fulfill such significant demand," writes analyst Seth Sigman.

The firm keeps an Outperform rating on Target and price target of $125 (33% upside potential).

As always, trade with caution and good luck to all!