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TGT

Can Target Corp. (TGT) Rise on Growth Initiatives?

Target Corp.TGT is an industry leader in the discount retail business across the US. The company provides an array of goods ranging from household essentials and electronics to toys and apparel for men, women and kids. It also houses food and pet supplies.

Target has undertaken several strategic initiatives to boost its performance, including reducing minimum value for free shipping to $25. Further, the company intends to deploy resources to develop its online platform as well as store facilities to make shopping more convenient for customers. With customers shifting rapidly to online shopping, it was becoming increasingly important for Target to develop sturdy omni-channel facilities to remain in the business. Moreover, the company plans to expand its merchandise assortments with special emphasis on Style, Baby, Kids, and Wellness categories that are performing well.

Further, Target is laying emphasis on developing smaller format stores to penetrate deeper into urban areas. We believe this approach will help the company to augment its sales without substantial capital investment.

Moreover, the company has adopted an aggressive cost reduction strategy. Target had earlier unveiled its plans to achieve $2 billion in annualized costs over the next two years through rationalization of operations, supply chain, technology and process improvements. Extensive corporate restructuring will also help in achieving the cost reduction target.

Additionally, with an aim to capture the booming online grocery delivery market, Target has teamed up with popular online grocery delivery service Instacart. The company will initiate the facility in its hometown Minneapolis by offering same-day delivery of grocery and home goods. We believe this is a smart move by Target, considering the increasing demand for online grocery delivery.

The stock appears compelling from the earnings perspective too, as it continued with its positive earnings surprise streak for the fourth straight quarter. In the trailing four quarters, the company has outperformed the Zacks Consensus Estimate by an average of 8.6%, including a positive surprise of 9.9% registered in the last concluded quarter.

Last month, the company posted robust second-quarter fiscal 2015 results. Target's second-quarter fiscal 2015 adjusted earnings of $1.22 per share beat the Zacks Consensus Estimate of $1.11 and surged 20.6% year over year. Total sales increased 2.8% to $17,427 million from the prior-year quarter and came ahead of the Zacks Consensus Estimate of $17,382 million.

Target currently carries a Zacks Rank #2 (Buy).

Other Stocks to Consider

Another favorably placed stock in the same industry is Big Lots Inc. BIG , also carrying a Zacks Rank #2. A couple of well placed stocks in the related industry include Express Inc. EXPR and Foot Locker, Inc. FL . Both stocks hold a Zacks Rank #1 (Strong Buy).

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TARGET CORP (TGT): Free Stock Analysis Report

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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