Target Q4 Beats Expectations, Analysts See Profit Pressure Ahead

Core Viewpoint - Target Corp reported its fourth-quarter results, showing mixed performance with earnings beating consensus but facing challenges in sales growth and profit margins [1][2][3]. Financial Performance - Target's fourth-quarter earnings were $2.41 per share, exceeding the consensus estimate of $2.26 per share [2]. - The company experienced a 2.1% increase in traffic, although this was partially offset by a 0.6% decline in average ticket size [2]. - Operating margins contracted by 110 basis points to 4.7%, while gross margins decreased by 36 basis points to 26.2%, attributed to higher digital fulfillment and supply chain costs, as well as increased promotions [3]. Future Guidance - Target guided for fiscal 2025 net sales growth of approximately 1%, which is below the consensus expectation of 3% [4]. - The company anticipates flat comparable store sales, contrasting with the consensus of 1.6% growth [4]. - Management indicated that ongoing consumer uncertainty and a weak start to February could exert "meaningful" pressure on profits in the first quarter [5][7]. Analyst Ratings - Telsey Advisory Group maintained an Outperform rating with a price target of $150, citing better-than-expected operating margins [2]. - Roth Capital Partners held a Neutral rating with a price target of $131, suggesting that the macro environment may not improve [4]. - JPMorgan also reaffirmed a Neutral rating, noting that fourth-quarter comparable sales were in line with expectations but projecting flat sales growth moving forward [6]. Stock Performance - Following the earnings report, Target's shares fell by 5.7% to $113.84 [7].