Target (NYSE:TGT) slumped in pre-market trading after the retailer missed earnings estimates for its first quarter of FY24. The company reported adjusted earnings of $2.03 per share in Q1, a decline of around 1% year-over-year, which missed analysts’ consensus estimate of $2.06 per share.
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The company’s sales declined by 3.2% year-over-year, with revenue hitting $24.5 billion compared to analysts’ expectations of $24.52 billion. Target’s first-quarter comparable sales declined by 3.7%, in line with expectations.
According to a CNBC report, the company’s management stated on a call with analysts that its results reflected “continued soft trends in discretionary categories.” Keeping this in mind, earlier this week, the retailer had slashed prices on over 5,000 items.
Target’s Growth Driven By Digital Business
Target’s management commented that its Q1 results were in line with expectations. This marked the third consecutive quarter with an “improvement” in the company’s topline, driven by growth in its digital business and same-day fulfillment services. Indeed, TGT’s digital comparable sales increased by 1.4% in Q1.
According to the TipRanks Stock Analysis tool, a sales breakdown of TGT’s sales in Q1 indicates that more than 18% of the retailer’s sales originated from its digital channels, compared to 17.5% in the same period last year.
Target’s FY24 and Q2 Outlook
Looking forward, management now expects adjusted earnings in the range of $1.95 to $2.35 in the second quarter while comparable sales are projected to stay the same or increase by 2%. In FY24, Target has forecasted adjusted earnings to be between $8.60 and $9.60 per share while comparable sales are likely to rise in the range of 0% to 2%.
What Is the Future of TGT Stock?
Analysts remain cautiously optimistic about TGT stock, with a Moderate Buy consensus rating based on 20 Buys and eight Holds. Year-to-date, TGT has increased by more than 10%, and the average TGT price target of $188.08 implies an upside potential of 20.7% from current levels. These analyst ratings are likely to change following TGT’s Q1 results today.
