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Target (TGT) is scheduled to report results of its first quarter before the market open on Wednesday, May 22. The company will host its earnings conference call at 8 am EST. What to watch for:


GUIDANCE: In March, Target forecast Q1 adjusted earnings per share of $1.70-$2.10 and a comparable sales decline of 3%-5%. Analysts currently expect EPS of $2.05. At the time, the company said fiscal 2024 EPS would be in the range of $8.60-$9.60, with comparable sales flat to up 2%. Analysts currently expect FY24 EPS of $9.43. Target said the outlook on the consumer remained "mixed," and that it expected consumers to remain "highly value-conscious."

Deutsche Bank expects the print will reinforce the bull case on Target shares. The firm acknowledged softer macro data points and increasingly value-seeking behavior but thinks the recent share price weakness among the retailers is overdone on fears around low-end weakness, especially for dollar stores.


'TACTICAL OUTPERFORM': Evercore ISI added Target to the firm's "Tactical Outperform" list ahead of the Q1 earnings report. Target "appears poised for a positive traffic/share catch-up starting in mid-March as they cycle last year's Pride assortment snafu," contended the analyst, who sees "upside to $170+," pending a solid guide and constructive tone into Q2. However, while the firm said it expects "a noteworthy improvement" in trend and a positive growth inflection, it added that "there is still much work to do in order to regain the market share and customers lost last year amidst a still volatile consumer backdrop." Evercore has an In Line rating and $178 price target on Target shares.


RETAIL LANDSCAPE WINNER: Earlier in May, Citi upgraded Target to Buy from Neutral, saying Target has emerged as "one of the winners within the retail landscape" with an opportunity to improve EBIT margin in the years to come. Following a "choppy" 2022 and 2023, the company is "on the right track" with inventory well-controlled, easier sales comparisons beginning in Q2 and conservative guidance. Citi believes the market may have reacted too negatively to some retailers amid a recently more uncertain consumer environment, and is attracted to retailers "that have mindshare for value and idiosyncratic opportunities to improve margins." It said Target checks both boxes.


REDUCING PRICES: Target announced ahead of its earnings report that it will lower prices on approximately 5,000 frequently shopped items across its assortment. The company said it has already lowered prices on 1,500 items and has plans to cut price on "thousands" more over the summer as it looks to attract budget-stretched consumers. These price reductions will collectively save consumers "millions of dollars" this summer, Target said. "We know consumers are feeling pressured to make the most of their budget," Rick Gomez, chief food, essentials and beauty officer at Target, said in a statement.

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