PLDR - Target Tanks But There Is Some Room For Optimism

• Target Corporation lowered its guidance for fiscal 2022 during its latest earnings update on May 18, which saw shares of TGT plummet during normal trading hours.
• In our view, Target remains a free cash flow generating powerhouse, and management will likely do whatever it takes to preserve the retailer's coveted Dividend Aristocrat status.
• Target is facing serious headwinds that can't be ignored, and its bloated balance sheet is a concern as well.
• At the low end of our fair value estimate range, we assign Target an intrinsic value of $176 per share, indicating the latest selloff may be a tad overdone.
• Target has its work cut out for it as it navigates inflationary pressures, supply chain hurdles, and labor shortages.

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