Here is your Pro Recap of the biggest analyst cuts you may have missed since yesterday: downgrades at Target, Goldman Sachs, American Express, and Tractor Supply.
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Target stock falls on Raymond James downgrade
Target (NYSE:TGT) was downgraded by Raymond James to Market Perform from Outperform, as reported in real time on InvestingPro.
The analyst believes the retailer is losing momentum in its revenue numbers, and also voiced concerns about macro trends:
Our change in opinion reflects our belief that [quarter-to-date] sales & traffic trends... have remained soft after taking a step down early in the quarter and suggest Target is losing topline momentum. In addition, we have seen further indications that overall consumer discretionary spending (more important for TGT’s mix of products) was weak during F2Q— creating greater potential for a higher promotional environment and consumables mix and ultimately delaying Target’s margin recovery story (key part of our prior thesis).
Earlier this month, TD Cowen cut its price target on the company to $166 from $200, noting that risks for the retailer may persist as the consumer shift is driving the downside. And last month, the company was downgraded by Citi, KeyBanc, and JPMorgan as well.
Target is set to report its Q2/24 earnings on Aug 16. Street estimates stand at $1.58 for EPS and $25.62 billion for revenues.
Shares lost ground in premarket trading, but were recently ticking up fractionally at $133.75 shortly after the opening bell.
Goldman Sachs cut to Neutral at Citi
Goldman Sachs (NYSE:GS) shares fell more than 1% yesterday after Citi downgraded the company to Neutral from Buy with a price target of $400.00 (from $370.00), noting that the valuation is ahead of itself.
At its recent analyst day, the management set a target of 15-17% ROTCE and introduced several KPIs to monitor their progress. According to Citi, last week’s Q2 earnings results showed continued advancement in meeting these KPIs, even though the adjusted return was a moderate 9%.
While we view the ROTCE target as achievable, we also believe it will take time as well as a better investment banking environment where GS is very levered to in GBM (investment banking highest return business) and AWM (via higher incentive fees/harvesting of gains on its on-balance sheet investments).
2 more downgrades
DZ Bank downgraded American Express (NYSE:AXP) from Buy to Hold with a price target of $180.00 following last week’s Q2 results, highlighted by an EPS beat but lower-than-expected revenues. This represents the second downgrade for American Express this week.
BofA Securities downgraded Tractor Supply (NASDAQ:TSCO) to Neutral from Buy and cut its price target to $226.00 from $270.00 ahead of the company’s Q2 earnings announcement tomorrow.
We expect TSCO to report an earnings miss and cut guidance given a fading tailwind from inflation and worsening demand for discretionary categories.
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