Why Now Might Be the Best Time to Buy Target Stock

Core Viewpoint - Target's stock is showing signs of bottoming out, but recovery may take time due to industry-wide headwinds impacting stock prices [1][2] Financial Performance - Target reported Q4 revenue of $30.92 billion, down over 3.0% year-over-year, but exceeded consensus by 30 basis points due to strong comp sales and digital performance [3] - Comp sales increased by 1.5%, driven by an 8.7% rise in digital sales, while same-day delivery surged by 25% year-over-year [4] - Adjusted earnings were $2.41, down nearly 20% year-over-year, but $0.16 above analyst expectations, with earnings strength anticipated to improve in 2025 [5] Guidance and Market Outlook - The company forecasts a solid 2024 with top-line growth near 1% and wider margins, but expects a weak Q1 due to February's softness [6] - The stock price fell post-Q4 release due to cautious guidance, but soft Q1 figures are not expected to undermine the company's financial strength [6] Shareholder Value - Target is focusing on improving balance sheet strength, maintaining a high-yielding dividend of 3.84%, and executing share buybacks [7][8] - The company has a 54-year track record of dividend increases, with a recent annual dividend of $4.48 and a payout ratio of 50.56% [9][10] Market Position and Trends - Analysts indicate a market bottom for Target, with a Hold rating and a consensus price target suggesting a 50% upside from current levels [10] - Institutional buying activity has ramped up, reaching multi-year highs in Q1 2025, indicating positive sentiment [11] Stock Valuation - Target's stock may reach the $100 level, which is seen as a potential bottom and an attractive entry point, trading under 11x its 2025 earnings [12] - The rebound could begin as early as Q2 2025, contingent on the FQ1 earnings report and guidance update [13]