TGT - Target Sales Slide: Hold Rating Amid Strategy Concerns

2024-06-10 19:04:42 ET

Summary

• Target is facing declining sales due to inflation, high interest rates, and a shift in consumer spending toward services.
• The company is focusing on everyday essentials to win back customers, but still expects sales to remain flat to slightly up in the current quarter.
• Initiating coverage with a hold based on Target's lack of a strategic growth plan to revive sales and slowdown in consumer spending.
• My analysis specializes in identifying companies that are experiencing growth at a reasonable price.

Investment Thesis

As I have written before in my Lululemon Athletica Inc. ( LULU ) article , consumer discretionary stocks are being negatively impacted by slower consumer spending. According to Target Corporation's ( TGT ) last earnings report the company's business is shirking. The retailer reported a fourth consecutive quarter of declining comparable sales, blaming a combination of high prices straining wallets and a shift in consumer spending toward services. This news sent Target's stock price tumbling, in stark contrast to its main competitor Walmart Inc. ( WMT ), which saw its stock surge after reporting earnings....

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