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Why Target Remains Unattractive to Shoppers and Investors

PART:
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Part 5
Why Target Remains Unattractive to Shoppers and Investors PART 5 OF 5

Why Analysts Remain Neutral on Target Stock

Recommendation summary

The majority of analysts covering Target (TGT) stock are maintaining a neutral outlook. Analysts believe that the company is taking strategic measures that are likely to benefit it in the long run. However, in the near term, increased competition, higher price investments, and rising costs will continue to affect its sales and profitability. Analysts’ consensus rating on TGT stock is 3.1 on a scale where one is a “strong buy” and five is a “strong sell.”

Meanwhile, of the 23 analysts providing recommendations for Target stock, 13.0% maintain a “buy,” 65.0% rated it a “hold,” and 22.0% maintained a “sell” rating. As of July 12, Target was trading at $50.87, representing a potential upside of 14% to the analysts’ 12-month target price of $57.99 per share.

Why Analysts Remain Neutral on Target Stock

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In comparison, analysts covering Costco (COST) stock maintain a positive outlook. Of the analysts covering Costco, 67.0% recommended a “buy,” and 33.0% maintained a “hold.” In contrast, analysts remained neutral on Walmart (WMT) stock despite its improved performance as persisting challenges are likely to affect Walmart’s performance. Of the 33 analysts covering the stock, 33.0% provided a “buy” rating, 58.0% recommended a “hold,” and 9.0% have a “sell” rating.

Valuation summary

As of July 12, 2017, Target was trading at a 12-month forward PE (price-to-earnings) multiple of 12.0x, which is well below the S&P 500 Index’s (SPX-INDEX) forward PE ratio of 18.0x. Meanwhile, the company is also trading cheaper than most of its peers. Walmart and Costco were trading at forward PE ratios of 16.7x and 24.3x, respectively, on the same date.

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