Amidst the recent weeks’ tumultuous market conditions, the shares of Target (NYSE: TGT) have experienced a substantial decline, primarily attributed to the fierce criticism surrounding its introduction of an LGBTQ-friendly clothing line for children.
Considering the prevailing circumstances, Finbold has taken the initiative to consult esteemed finance experts, seeking their valuable insights on the future trajectory of TGT stock. With a noteworthy decrease of 15.21% recorded over the past month, the ongoing boycott of Target and its subsequent implications on the company are crucial factors warranting a comprehensive evaluation.
Additionally, an in-depth chart analysis has been conducted to provide a deeper understanding of the potential direction in which TGT stock may be headed, particularly by the end of 2023.
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Former Wall Street professional, Kenneth Thom
According to the full-time derivatives trader and former Wall Street professional, there are two distinct approaches to consider when evaluating Target’s year-end price target. Taking a fundamental standpoint into account, it becomes apparent that Target’s current trading value reflects a substantial markdown compared to its counterparts within the same sector.
He noted
“Typically, any negative news tends to be short term and blows over quickly, such as when Balenciaga had backlash for their advertisements. People will always have negative things to say about Target, but at the end of the day, they’re not going to stop buying clothing, groceries, and other household goods. Placing it at fair value, would put it somewhere along the lines of $165-170 by the end of the year.”
He added:
“From a technical point of view, it’s holding below several key prices, which would contradict fundamentals and suggests additional downside. Important key prices are $139 and $150. If it can hold below $139, we can see additional downside on TGT until $110 before any kind of reversal. If pricing holds above $139, I would expect the price to settle somewhere around $145-150 by the end of the year. Anything above the $150 key price would suggest similar highs of $165-170 similar to fundamentals.”
Senior Researcher for Unicus Research LLC, L. Burke
L. Burke, a Senior Researcher at Unicus Research LLC, has provided an end-of-December stock price projection for TGT, estimating it to be $62.00. In his analysis, Burke emphasizes Target’s challenging circumstances as several unfavorable factors have converged.
One notable concern is the decline in Target’s average profit on sales, which has plummeted from over 8% to a meager 3.4%. Additionally, the company’s cost of capital has significantly increased due to its reliance on commercial paper for operational financing. Despite the success of their partnership with TD Bank, generating over 170 million through the Red Card, the rising credit card default rates cast uncertainty on the sustainability of this revenue stream.
Target faces fierce competition from various sectors, including retail giants like Walmart, Kroger, and Khols, as well as the ever-growing online shopping industry.
“While Target has an online presence, as other retailers show gains in online sales, Target’s online sales have been more or less flat for the last three years. And just as it looked bad – it got worse. Target was a ‘neutral brand’ and, for some horribly misguided reason, chose to pick a side in a cultural war.”
TGT chart analysis
Over the past month, TGT has exhibited a notable trading range, fluctuating between $126.75 and $162.84, demonstrating considerable volatility. Presently, the stock is trading near the lower end of this range.
Resistance is observed at $159.88 in the daily time frame, identified through a trend line analysis. It is worth mentioning that there has been a significant increase in trading volume in recent days.
However, TGT’s current trading position near the lower end of its 52-week range raises concerns. This is especially notable considering that the S&P500 Index is currently trading near new 52-week highs. From a technical perspective, TGT has received a poor rating, indicating potential challenges ahead.
Furthermore, the setup does not appear optimal at the moment, with the price movement displaying excessive volatility, making it challenging to identify favorable entry and exit points. Under these circumstances, it might be prudent to wait for a period of consolidation before considering any trading decisions.
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