TGT - Target: Promising Recovery Trends

2024-05-03 10:31:26 ET

Summary

• Target has outperformed its peers and the consumer staples sector due to its strong recent earnings and guidance.
• The company is focusing on driving top-line growth through new private brands, store openings, and expanding its loyalty program.
• Target aims to grow its top-line at a rate of 4% annually for the next decade and expects to grow back into a 6%+ EBIT margin business.
• Recovery is promising, but not a done deal. The stock trades at its 5-year average valuation.

Target Corporation ( TGT ) has outperformed its retailer peers and the consumer staples sector this year by a significant margin. This was primarily due to its upbeat 4Q (year-end: January) earnings result and FY24E guidance. Both of which mark the bottoming of its business cycle, which has fallen prey to the reopening of the economy post-pandemic. When we last wrote about Target in 2019, the company was embarking on a supercycle of the burgeoning omni-channel distribution model, which brings synergy between its online and offline channels....

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