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Target (NYSE:TGT) was downgraded by BMO Capital Markets and Deutsche Bank analysts on Thursday in reaction to the retailer’s third-quarter earnings, in which it missed earnings estimates.
BMO downgraded the stock to Market Perform from Outperform, cutting the firm’s price target on the stock to $165 from $190 per share.
In a note to clients, it said, “while we continue to expect TGT’s EBIT margin to rebound to 6%+ following depressed levels in 2022, we believe the stock is likely fairly priced and already reflects a rebound margin (we forecast nearly 90% earnings rebound next year), but we are less certain regarding the magnitude of sales to attach to this EBIT margin given TGT’s market share gain trends.”
Meanwhile, Deutsche Bank analysts downgraded Target to Hold from Buy, slashing the firm’s price target on the company’s shares to $144 from $183.
The analysts explained that the firm has “lower confidence that the company can meaningfully recapture margin in 2023 on lingering markdown pressure, particularly in light of comp growth coming under pressure.”
“The softness in comp performance comes despite elevated promotional activity 4QTD, as consumers are increasingly gravitating towards deep discounts and value, which makes the margin recovery story harder to defend, in our view. Ultimately, we can no longer confidently model $12+ in EPS next year,” they added.
After a more than 13% decline on Wednesday, Target shares are up 2.77% at the time of writing on Thursday.
