Here's What Wall St. Experts Are Saying About Target Ahead Of Earnings

Target (TGT) is scheduled to report results of its first-quarter before the market open on Wednesday, May 18, with a conference call scheduled for 8:00 am EDT. What to watch for:

GUIDANCE: In March, Target forecast fiscal 2022 adjusted earnings per share up high-single digits, with revenue up low- to mid-single digits and operating margin of at least 8%. Analysts currently expect EPS of $14.64 on revenue of $109.93B. Also in March, Target guided for the long-term, forecasting adjusted EPS growth of high-single digits and mid-single-digit growth in revenue.

Target also said it would invest up to $5B to continue scaling its operations into 2022. Target will invest in its physical stores, digital experiences, fulfillment capabilities, and supply chain capacity that "further differentiate its retail offering and drive continued growth," the company stated. In 2022, Target plans to open approximately 30 stores that it said will range in footprint, from "mid-size locations in dense suburban areas to small-format stores in city centers like Charleston, SC, and New York's Times Square."

Stifel analyst Mark Astrachan raised his Q1 comp growth estimates by 150 basis points, to 1.0%, which is slightly ahead of consensus, he reduced his gross margin view by 100 basis points to reflect higher freight and logistics costs. His lower target reflects heightened market risk, but he continues to see a favorable risk/reward from current levels as he expects Target to retain pandemic-driven share gains, Astrachan told investors.

LEADERSHIP TEAM UPDATES: Earlier this month, Target named Cara Sylvester executive VP and Chief Guest Experience Officer, a new role for the company. Brett Craig was promoted to Executive VP and CIO after Mike McNamara, CIO since 2015, stated his intent to retire. Matt Zabel was promoted to executive VP and General Counsel, while Arthur Valdez, Chief Supply Chain and Logistics Officer, will join Target's leadership team.

TOP PICK AS DEFENSIVE PLAY: Deutsche Bank analyst Krisztina Katai called Target her top pick as a defensive play. Concerns around the U.S. consumer, particularly the lower-end, have been heightened significantly as recessionary fears "rule the day," Katai told investors in a research note. Solid underlying fundamentals observed in Q1 "could mean nothing as long as fears around a slowing consumer prevail," said the analyst.

'CONSISTENT' TRAFFIC TRENDS: Gordon Haskett analyst Chuck Grom upgraded Target to Buy from Hold with a price target of $300, up from $255, which implies over 30% upside from current levels. Traffic trends in February and March have been "remarkably consistent" at Target and with a later Spring/Easter shift still on the come, these trends could inflect higher in the coming weeks, Grom tells investors in a research note. The analyst says expects multiple appreciation for the shares as the market gains more confidence with the Target model in a post-COVID world. He believes sentiment is too negative on Target.