Target Plunges For 10th Day As Boycott Leads To "Traffic Weakness", JPM Downgrade Adds To Groom And Doom
BY TYLER DURDEN
THURSDAY, JUN 01, 2023 - 12:10 PM
As if Target didn't have enough headaches on its plate with a nationwide boycotting campaign targeting the grooming-friendly retailer sending its sales tumbling after it too was Budlighted, one can also add a JPM downgrade (from Overweight to Neutral) and price target cut (from $182 to $144) into the mix.
In a note from JPM Chris Hoovers, he explains that he is downgrading TGT to Neutral based on the following:
(1) The consumer is broadly weakening while the share of wallet shift away from goods (51% of TGT sales) is ongoing.
Target results highlight 'economic slowdown realities' -CIO
(2) Disinflation in grocery (~40% of sales ex beauty and including essentials) continues to accelerate, eating into the ballast of TGT's recent slightly positive to negative LSD SSS trend. TGT comped +HSD in grocery and +LSD in essentials in 1Q, adding 2-3 points to total 1Q SSS vs. the overall flat comp. However, JPM's projection suggests this tailwind could be close to nil by 4Q. Even beauty (estimated at ~10% of sales) is slowing on a 1Y basis per Nielse
(3) While still positive on a 3Y basis, TGT has been giving back share on a 1Y view and this share loss could accelerate into back to school and linger into holiday given consumer pressures and what JPM tactfully calls "recent company controversies." This, the bank says, could turn TGT's traffic negative after an impressive run of 12 consecutive positive quarters. This shift is "generally bad for retail stock valuation given attribution is highest at the topline and, particularly for traffic."
https://www.zerohedge.com/markets/target-plunges-10th-day-boycott-results-traffic-weakness-jpm-downgrade-adds-groom-and-doom
