Target reported earnings this morning that included lowering the outlook on the companies profit and same store sales. The stock is down 7% and seems to be bringing the entire market down a bit this morning. Competition from Amazon and Walmart, along with the companies own internal issues seems to be the main problems. The stock trades at 14x TTM and forward earnings already with a 3% dividend yield, so I wouldn’t expect this news to be a catalyst for the stock to crater. But I do think price is headed back down and possibly below the prior two lows at $65.
How far below? Who knows. But I do see support at $61, which would match the 25% drop experienced in 2013-2014 due to the credit/debit card breach issue. $58 would be another key technical area to watch if it gets there. If your bullish on the stock for whatever reason, those would be two areas I would be interested in.
Personally I think there are better options in the retail space between Amazon, Ross Stores, Dollar Tree and even Dollar General. Target has never really shown much in terms of revenue growth and EPS growth has been non-existent for 3 years. And in terms of stock performance, Target has not been able to keep up with the S&P 500 on any time frame (which includes the dividend). So investors would have been better off owning the SPY or especially XLY.
Doesn’t mean the stock can’t outperform in the future. But trying to time that type of fundamental and technical turnaround is impossible for 99% of investors.
(Disclosure: Long AMZN, ROST)