What Happened:
Shares of general merchandise retailer Target (NYSE:TGT) jumped 15.1% in the pre-market session after the company reported a "beat and raise" quarter. Target blew past analysts' revenue, gross margin, and EPS expectations. The topline growth was broad-based, as the company observed traffic growth in all six core merchandising categories. Looking ahead, it lifted its full-year EPS guidance. Overall, this was a solid quarter with some key areas of upside.
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What is the market telling us:
Target’s shares are somewhat volatile and over the last year have had 4 moves greater than 5%. But moves this big are very rare even for Target and that is indicating to us that this news had a significant impact on the market’s perception of the business.
The previous big move we wrote about was 6 days ago, when the company gained 5.9% on the news that the major indices soared (Nasdaq +1.9%, S&P +1.2%) after Walmart's earnings and retail sales data revealed strong consumption patterns in the U.S. economy. Walmart exceeded analysts' revenue and EPS expectations in Q2'2024. Moving on, the company raised its full year outlook for net sales and EPS as well, another major positive.
CFO, John David Rainey added "We see, among our members and customers, that they remain choiceful, discerning, value-seeking, focusing on things like essentials rather than discretionary items, but importantly, we don't see any additional fraying of consumer health."
Target is up 12.4% since the beginning of the year, but at $160.88 per share it is still trading 9.5% below its 52-week high of $177.82 from March 2024. Investors who bought $1,000 worth of Target’s shares 5 years ago would now be looking at an investment worth $1,562.
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