Earnings Watch: Analyst Concerned About Target’s Guidance Ahead Of Q4 Report

Target (TGT) is scheduled to report fourth quarter results before the market open on Wednesday, February 24, with a conference call scheduled for 10:30 am ET. Target offers merchandise at discounted prices through its retail stores and online business.

EXPECTATIONS: Analysts are looking for earnings per share of $1.54 on revenue of $21.75B, according to First Call. The consensus range for EPS is $1.48-$1.58 on revenue of $21.33B-$22.18B. In its last earnings report, Target forecast Q4 adjusted EPS of $1.48-$1.58 and comparable store sales up 1%-2%. The company also narrowed its adjusted EPS view for fiscal year 2015 to $4.65-$4.75 from $4.60-$4.75 and forecast FY15 SSS “firmly” in the 1.5%-2.5% growth range.

LAST QUARTER: Target reported third quarter adjusted EPS of 86c on revenue of $17.6B, in-line with analysts’ estimates of 86c and $17.57B, respectively. The company said comparable sales increased 1.9% in Q3, reflecting a 1.9% increase in comparable sales combined with sales from new stores. On its earnings conference call, Target said it was working with CVS (CVS) to secure regulatory approval for their deal and said it did not expect to reach its 40% digital sales goal in 2015. NEWS: In early December, Target reached a $39M settlement to resolve claims by banks looking to recoup money spent on reimbursing fraudulent charges, Reuters reported. Also during the quarter, CVS completed the acquisition of Target’s pharmacy and clinic businesses for approximately $1.9B and Reuters said that Target was developing its own mobile wallet.

STREET RESEARCH: Following the Q3 earnings report, Wells Fargo said that the company’s guidance was “conservative” and the stock’s valuation is “compelling.” Ahead of Wednesday’s report, JP Morgan analyst Christopher Horvers removed Target from his firm’s Analyst Focus List and said he has “guidance concerns.”

PRICE ACTION: Target shares are up over 1.4% over the past three months. In morning trading ahead of Wednesday’s earnings report, shares were up about 1.4% to $73.43.