Target stock jumped 11.2% in four days
2018 has started on a strong note for Target (TGT). The company’s stock has risen about 11.2% in the last four trading days including yesterday’s gain of 4.6%. The company’s stock turned positive after trading in the red for a long time as the graph below shows. In comparison, stocks of rivals Walmart (WMT) and Costco (COST) showed minimal movement during the four-day period.
Improving fundamentals are driving stock higher
Mass merchandisers and retailers witnessed strong holiday sales despite growing pressure from online rivals including Amazon (AMZN). Focus on merchandising, value pricing, and omnichannel offerings helped these companies to improve sales. As for Target, the company’s strong stock run has been driven by its improving fundamentals.
Target reported strong holiday sales numbers and raised its guidance for the fourth quarter. Meanwhile, the company remained upbeat on its sales and expects its top line to continue to improve in fiscal 2018. Meanwhile, the company expects its bottom line to stabilize in fiscal 2018 and see a YoY (year-over-year) improvement.
Buoyed by the company’s resilience and ability to thrive under challenges, multiple analysts upped their price target on its stock. Moreover, Susquehanna upgraded its rating on Target to “positive” from “neutral” and lifted its price target by 56.0% to $84 per share.
Overall, Target is set to capitalize on its growth investments and report improved financials in fiscal 2018. The company’s focus on merchandising through the rollout of “only-at-Target” brands, low pricing, fast delivery options for online orders, and growing digital sales is expected to drive its top line higher. Besides, the cushion on the bottom line from lower tax rates should support the company’s growth initiatives and help it to enhance shareholders’ returns through higher dividends and share repurchases.