Target (NYSE:TGT) stock is in the news today as investors react to a new note from Jefferies that gives the retail company flak.
Jefferies analyst Stephanie Wissink is behind today’s note. She warns that the economic slowdown affecting the U.S. is having a negative effect on Target’s business. This comes after the retailer’s decision to liquidate slow-moving inventory in June.
But that’s not all the analyst has to say about TGT stock. She also includes a reduced earnings per share outlook for the company in her note. That covers the rest of 2022, as well as the following year.
What’s Behind the Bearish Stance on TGT Stock?
Here’s a portion of Wissink’s note collected from Yahoo! Finance:
“The cut to our model appears drastic at face value, fully discounting Target’s ability to bounce back to 6% operating margin in the second half and instead assumes: 1) inventory digestion takes longer; 2) discounts are deeper & competitive promotions intensify during back-to-school/holiday; 3) discretionary categories remain soft into second half with a shift to necessities; and 4) weekly variability in consumer behavior in response to +/- inflation makes forecasting difficult and suggests the need for more cautious inventory buys for 2H and 2023.”
Despite the warning against TGT stock, the retail company’s shares are climbing 2.3% higher as of Monday morning. However, traders will note that TGT is still down 27.9% since the start of the year.
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On the date of publication, William White did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.