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Target Stock: Why Analysts Remain on the Sidelines

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Apr. 1 2019, Published 11:36 a.m. ET

Analysts suggest “holds” on Target

Target Corporation (TGT) is expected to carry the momentum in both its sales and earnings into fiscal 2019. The company’s top line is likely to benefit from higher comparable sales, reflecting a rise in its traffic. Meanwhile, its bottom line growth is expected to be higher than both Walmart’s (WMT) and Costco’s (COST) driven by improved comparable sales and its lower outstanding share count.

However, Target stock has risen 21.4% YTD (year-to-date) as of March 29, which implies that the positives are priced in and the stock could have a limited upside. Target’s profit margins are also expected to stay low in the near term, reflecting higher digital fulfillment costs and an unfavorable mix. Heightened competition in the grocery space also poses a challenge.

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Rating and target price summary

Among the 26 analysts covering Target Corporation stock, 16 analysts continue to suggest “holds,” nine analysts suggest “buys,” and one analyst suggests a “sell” on the stock. Analysts have a target price of $85.01 per share on TGT, which implies a potential upside of 5.9% based on its closing price of $80.26 on March 29.

Analysts recommend “holds” on Walmart stock, reflecting pressure on its earnings in the near term. Meanwhile, Wall Street suggests “buys” on Costco stock, as Costco is expected to sustain the momentum in its comps.

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