Shares of Target (NYSE: TGT) were down in morning trading at the time of publishing on Monday after top-rated KeyBanc analyst Bradley Thomas downgraded the stock to a Hold from a Buy over concerns of consumer headwinds.
The analyst pointed out that the passage of the debt ceiling package by Congress includes a key condition that student loan repayments will begin after August 30. Thomas commented, “With ~27M borrowers expected to begin repayment and an average monthly payment of $400-$460, we estimate the resumption of federal student loan repayments will create a ~$46.1B headwind from September-December, with an annualized impact of $128.8B- $148.1B… The policy change further elevates the risk for consumer discretionary spending, particularly for the 2023 back-to-school and Holiday Season.”
This is another downgrade after a JP Morgan analyst downgraded the stock last week even as Target delivered better-than-expected results in Q1. The stock is currently trading near its yearly low of $126.75 and has dropped more than 15% in the last month.
Besides Thomas, other Wall Street analysts, however, are cautiously optimistic about TGT stock with a Moderate Buy consensus rating based on 14 Buys and nine Holds.
