TGT Stock Down As Forecast Cut But Fundamentals Show Target is a Buy

Is TGT stock a buy or sell? The latest TGT stock forecast for 2022 and 2025, including TGT price prediction. Target warns of weaker margins again as inflation

Investment Ideas

Platform

Education

TGT Stock Down As Forecast Cut But Fundamentals Show Target is a Buy

George Lucas

8:37 AM

Newsletter

blog post cover photo

Image credit: undefined

Target warns of weaker margins again as inflation curbs consumer spending

Target Corp on Tuesday cut its quarterly margin forecast issued just weeks earlier and said it would have to offer deeper discounts and stock more essential items, as inflation dents consumer spending. This headline and article indicate a negative sentiment of 0.33, which makes sense given the downgrade. I think TGT is undervalued at this level and will explain why.

TGT Stock Forecast and Price Prediction

Should you buy TGT stock and can we get an accurate Target Corporation price prediction? Let's jump to the chase, my TGT Stock Forecast for 2025 is $275. If you would like to know how I predicted the future stock price of Target Corporation, then keep reading. This should help us answer the question, is TGT stock a buy or sell?

You are probably aware that Target Corporation (NYSE: TGT) is a leader in the Discount Stores space. In this analysis, we are going to look at some of the key financial ratios for Target Corporation to determine a price prediction for TGT. Remember these price predictions take into account several assumptions (which I will highlight) to determine a future price. I'll share my TGT stock price prediction, then show you the approach and assumptions used to calculate the TGT stock forecast.

Before we go any further, let me start by saying this, stock forecasting is hard. I don't know what the future will hold, and neither do Wall Street Analysts. If they could accurately predict the future, they would be able to beat the S&P 500 and I would be extremely wealthy. What I can say is that we can use available data to determine a reasonable TGT stock forecast and helps us make better investment decisions, so hopefully, you find this analysis useful.

TGT Stock Forecast for 2025 is $275 Per Share

The Target Corporation stock price prediction of $275 was derived from 3 main sources of data. I'll dive into the approach to show you how I determined how I “predicted” a stock price of $275 for TGT

  1. Target Corporation Financial Growth Metrics
  2. TGT Analyst Ratings
  3. TGT PE, ROE, and DCF Rating

The Financial growth Metrics provide an analytics valuation approach to determining a reasonable TGT stock forecast. The other two sources of data will be used to adjust the stock price prediction for TGT. Let's be honest, if you've ever done a valuation exercise on a stock or tried to determine the future price, it is both an art and a science.

TGT Stock Forecast Using PE Ratio and EPS

For this part of the analysis, I am looking at the history of key financial metrics for Target Corporation to forecast the stock into 2022 and 2025. Most investors know that historical performance does guarantee future performance, but it is useful to see how TGT has been trending.

TGT has experienced a 3 Year Earnings Growth Per Share of 64%. Let's assume that TGT can continue to grow Revenue and Earnings at a similar rate for the next three years, then we can assume the TGT stock forecast for 2025 will follow a similar growth trajectory. I recognize there are a lot of other factors but this is a straightforward and solid approach.

With TGT Earnings Per Share of 12 projected out at the 3-year growth rate gives us a future EPS of 20. If the current TGT Price to Earnings Ratio is 13.3 (and we assume this remains the same) then we determine the TGT stock forecast by multiple the P/E by the EPS to give us a stock price prediction of approximately $275 per share

There are other ways to predict the price for TGT but I would argue that P/E, EPS, and Earnings Growth are the most commonly used financial metrics by analysts and investors. This is why I used them to forecast TGT's stock price.

TGT Stock Forecast 2022 and Beyond Using Analyst Ratings

Analyst Ratings have provided relatively strong indicators of future price movement, which is why they are used to determine a TGT stock forecast. It can also help you determine if you should buy or sell TGT There are a total of 33 analyst ratings for TGT. Here is the current breakdown of analyst ratings:

  • 25 Buys
  • 8 Holds
  • 0 Sells

This breakdown of ratings indicates that Wall Street analysts are overall (Bullish/Bearish) on Target Corporation. I factored this into the TGT stock price forecast by using it as direction guidance for the future. If you were to make investment decisions based on just analyst ratings, this would indicate TGT is a buy.

Target PE, ROE, and DCF Rating

TGT's current P/E Ratio is 13.3 and has an ROE of 0.45. I would consider this a good P/E and ROE for Target Corporation. These ratios in isolation provide some insights, but it is better to understand them in content for both TGT and the sector. Utradea provides a PE, ROE, and DCF rating for stocks ranked between 1 (very poor) and 5 (very strong). Without having to go through the calculations, this provides me with a reasonable view of if these key metrics for Target Corporation are good or bad from an investment perspective. Here is a breakdown of the ratings

A DCF rating of 5 - Very Strong

A PE rating of 5 - Very Strong

An ROE rating of 4 - Strong

Based on the actual PE and ROE, along with the metric ratings, I would say that the TGT forecast is reasonable.

TGT Stock Forecast and Price Prediction Summary

Should you buy TGT? Well, based on the TGT stock forecast of $275 per share, the underlying analysis, and the current price of TGT, I would agree with the analysts and say TGT is a buy. Let me know what you think, happy to dive into other aspects of TGT to help you make an informed investment decision.