Here’s what Wall Street experts are saying about Target ahead of earnings

Target to report Q4 earnings before the market opens Tuesday

Target (TGT) is scheduled to report results of its fourth quarter before the market open on Tuesday, February 28, with a conference call scheduled for 8:00 am EDT. What to watch for:

GUIDANCE: In November, Target forecast Q4 comparable sales down in the low single digits. At the time, the company stated: "Based on softening sales and profit trends that emerged late in the third quarter and persisted into November, the company believes it is prudent to plan for a wide range of sales outcomes in the fourth quarter, centered around a low-single digit decline in comparable sales, consistent with those recent trends. Similarly, the company is now planning a wide range for its fourth quarter operating margin rate centered around 3%." The company’s chief operating officer added that Target is on track to deliver total sales "well over" $100B for the year.

Cowen believes Target is a "show-me" story as investors will likely prefer to "wait & see," adding that guidance is likely to be back-half loaded given macro pressures. Meanwhile, UBS said the Q4 print will provide an opportunity for the retailer to reassert some bullish sentiment on its stock, and that while the quarter likely had its puts and takes, it will be important to see that Target’s traffic was stable during the period.

‘TACTICAL UNDERPERFORM’: On February 17, Evercore ISI initiated a negative Tactical trading call on Target and added the stock to the firm’s "Tactical Underperform" list ahead of the company’s Q4 earnings report. Noting that this marks its fourth consecutive quarter of negative trading calls on Target, the firm said "eventually we’ll be wrong!" The stock has outperformed the market by 12% year-to-date and Evercore anticipates 2023 EPS guidance to come in under Street estimates, probably $8.50-$9.00.

Oppenheimer noted that the stock underperformed in 2022, falling 36% vs. a 19% decline in the S&P 500, but there is potential for a strong multi-year profit recovery driven by gross margin expansion, management cost actions, and share gains. While some bumps along the way against seemingly aggressive Street forecasts for FY23 could be expected, Target is well positioned to continue capturing share, the firm said.

BED BATH STRUGGLES TO DRIVE NT SHARE OPPORTUNITY: Piper Sandler believes struggles at Bed Bath & Beyond (BBBY) will drive a significant near-term share opportunity at Target. Piper’s analysis of Bed Bath’s store closures indicates that a Target store is located approximately 2.1 miles on average from the closed locations.

‘RESET’ IN U.S. RETAIL: Barclays said the U.S. retail sector balances a positive structural view of the group post-pandemic along with a relatively stable consumer backdrop against pockets of cyclical risk and strong year-to-date stock moves. The firm also noted that supply/demand dynamics have supported record margins normalizing, adding that it has greater preference for stocks with "defensive characteristics."

SENTIMENT: Click here to check out recent Media Buzz Sentiment on Target as measured by TipRanks.

Keywords: earnings, quarterly earnings, earnings report, retail, Q4