PM GoldFix: JPM Downgrades Target
"TGT over-indexes to millennial customers with Student Loan payments due"
Good Afternoon. J.P. Morgan has downgraded Target Corporation (TGT) to Neutral for several reasons.
Our personal favorite meta-quote:
Target markets to a narrow homogeneous demographic segment that now may be backfiring.
Lastly, TGT over-indexes to the millennial customer and, should student loan payments come back on, the company is more exposed than others in our coverage.
Enough said on that. Here’s our summary.
Firstly, the consumer market is weakening, and there is a shift away from goods, which form a significant portion of TGT's sales.
Additionally, disinflation in the grocery sector, which accounts for a large portion of TGT's sales, is accelerating, impacting TGT's recent positive to negative trend in same-store sales (SSS). In the first quarter, TGT saw positive results in grocery and essentials, contributing to overall SSS growth.
However, projections indicate that this trend may diminish by the fourth quarter. Even the beauty segment, which represents around 10% of sales, is slowing down based on a year-over-year comparison.
TGT faces various challenges in the consumer market, increasing the risk of downward earnings revisions.
J.P. Morgan's target price for December 2023 is $144, based on their estimates of TGT's earnings per share (EPS) and earnings before interest, taxes, depreciation, and amortization (EBITDA) for fiscal year 2024, applying multiples of approximately 15x and 9x, respectively.
ZH wrote this up earlier today
The stock has been a bloodbath making lower lows 10 days running…
Report at bottom
JPM on Target, BOA Energy Weekly, and Rabo’s Monthly Macro Report Attached: