Target (TGT)

Jun 2, 2022Trade Ideas

Target was crushed in May.

All after earnings missed the mark, with Q1 profits falling short, even as sales came in above expectations. It also lowered its full-year forecast on operating income margins to 6%, instead of its forecast 8%.

Also, according to CEO Brian Cornell, “We were less profitable than we expected to be, or intend to be over time … it’s clear that many of these cost pressures will persist in the near term. Throughout the quarter, we faced unexpectedly high costs, driven by a number of factors, resulting in profitability that came in well below our expectations, and well below where we expect to operate over time.”

However, the pullback may be an opportunity.

According to Raymond James analyst Bobby Griffin, “We continue to be buyers on the pullback, and see Target as a long-term winner in today’s retail landscape and believe the company can sustain its recent market share gains across multiple product categories due to its customer loyalty (i.e., F1Q traffic gains), strong brand partnerships (AAPL, ULTA, LEVI etc.), and growing private label penetration,” as noted by Investing.com.

Technically, TGT is also oversold on RSI, MACD, and Williams’ %R. With a good deal of patience, we’d like to see the retail stock eventually refill its bearish gap around $212.

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