Target stock down about 5% as the company announces guidance for Q4
Target Corporation (NYSE:TGT) stock is trading at $67.17, plummeting more than 5% following the retailer’s announcement of the guidance for the holiday season quarter. Additionally, today, the company opened trading with strength in stock price, along with its peers in the retail industry.
The Minneapolis, Minnesota based retailer announced that its same store sales for both months November and December 2016 slid 1.3% and for the same period, total sales also declined around 5%. The management at Target believes that the drop in sales is because of absence of the pharmacy and clinic business revenue collections.
The Chairman and Chief Executive Officer (CEO) at Target said: “While we were pleased with Black Friday sales, December digital sales growth of more than 40 percent and continued strength in our Signature Categories, these results were offset by early season sales softness and disappointing traffic and sales trends in our stores.”
For the fourth quarter of 2016, Target expects same store sales to decline between the range 1.5% to 1%; while the prior guidance for same store sales was between -1% to 1%. While the retailer suggests GAAP Earnings per Share (EPS) from continuing operations to land between $1.45 and $1.55, the forecast for Adjusted EPS also remains the same. Previously, the company expected to report EPS between $1.55 and $1.75, in comparison to the Wall Street analysts’ consensus estimate of $1.65.
For the full year 2016, Target’s estimate for Adjusted EPS is between $5 and $5.10. The prior expectations for the key financial metric was between the range $5.10 and $5.30.
Street analysts were prompt with their sell-side updates, as several investment firms issued reports soon after the 4Q guidance announcement. Buckingham Research analyst John Zolidis lowered his estimates and also curbed his 12-month price target on Target stock to $77 from $85. However, the analyst still rates the stock as Buy. Moreover, Morgan Stanley’s analyst Simeon Gutman also reaffirmed his Underweight rating on Target stock and slashed his price target to $65 from $67.