The future could be rough for retail powerhouse Target, according to JPMorgan.
The banking institution demoted the retailer from overweight to neutral this Thursday and also dropped the price target from $182 to $144.
This new projection indicates a potential 10% increase in the value of Target’s stocks, which closed at $130.93 per share on Wednesday.
JPMorgan’s Christopher Horvers, the lead analyst on this case, identified four significant factors contributing to the demotion.
These include a deteriorating consumer base, diminishing grocery prices, a potential loss of market share, and a high dependence on millennials who may soon face resumed student loan payments.
However, the retailer’s financial woes come after it pushed both sexualized and satanic ideology through its products and advertising, demonstrating a significant disconnect between Target’s messaging and its customers.
Horvers expressed concerns over the storm gathering over Target, saying, “Today, we believe TGT sits at the center of a number of consumer headwinds.”
He further elaborated, “With 51% of its sales derived from discretionary categories (apparel, hardlines, and home), 49% derived from more consumable categories (which are facing disinflation), accelerating share of wallet reversion occurring, and student loans potentially coming due, we see the risk of downward earnings revisions rising.”
Horvers also suggested that the bank has re-evaluated its anticipations for the company’s forward guidance into 2024.
It predicts full-year earnings of $9.90 per share next year, a decrease from its previous estimation of $10.37.
This comes on the back of Target’s stocks dwindling by 12.1% in 2023.
A lackluster sales growth in the first fiscal quarter, as compared to the same period in the previous year, has been acknowledged by the company.
Moreover, Target predicts slow sales growth for the ongoing quarter.
So far, Target’s stock performance this year has been marked by a 12.2% drop, adding more pressure to the beleaguered retail giant.
The pertinent information and insights for this report were contributed by CNBC’s Michael Bloom.
