Retail giant Target ( TGT ) will report its Q4 results before the market open March 6. Analysts expect earnings of $1.39 per share, down from $1.45 during the same period last year. TGT shares have risen 9.0% on the year.
TGT was recently trading at $73.71, down $4.99 from its 12-month high and $25.15 above its 12-month low. Technical indicators for TGT are bullish with a strong upward trend. The stock has recent support above $71.75 and recent resistance below $78.50. Of the 18 analysts who cover the stock, four rate it a "strong buy", 12 rate it a "hold", and two rate it a "strong sell". TGT gets a score of 66 from InvestorsObserver's Stock Score Report.
TGT shares came to life over the last six months, with the stock rising around 39% over the last three months alone following its last quarterly report that topped estimates on both the top and bottom line. The company's fourth-quarter report holds a lot of weight since it includes the all-important holiday season. Target will need to show not only strong numbers for the quarter, but also evidence that it has been able to boost its online business. The company's online business remains small in comparison to its overall business, accounting for just 4.3 percent of total sales last quarter, but that was up from 3.5% during the same period a year earlier, so it is growing, but Wall Street is going to want to see that number continue to rise. The company is investing heavily in its online business, revamping its stores, and opening smaller stores. The stock trades at $75.04, with an average price target of $76.29.
Stock Only Trade
If you're looking to establish a long stock position in TGT, consider buying the stock under $73.75. Sell if it falls below $66.50 or take profits if it gets to $84.75.
If you want a bullish hedged trade on the stock, consider an April 57.50/62.50 bull-put credit spread for a 35-cent credit. That's a potential 7.5% return (64.5% annualized*) and the stock would have to fall 14.7% to cause a problem.
If you want to take a bearish stance on the stock at this time, consider an April 85/90 bear-call credit spread for a $0.35 credit. That's a potential 9.9% return (73.7% annualized*) and the stock would have to rise 15.9% to cause a problem.
Covered Call Trade
If you like the stock, but wish to lower your cost basis on a new position, you may want to consider an April $75.00 covered call. Buy TGT shares (typically 100 shares, scale as appropriate), while selling the April $75.00 call for a debit of $69.85 per share. The trade has a target assigned return of 7.4%, and a target annualized return of 56.0% (for comparison purposes only).