Target Corporation (NYSE:TGT) shares are trading lower on Thursday.

Yesterday, the company reported better-than-expected second-quarter financial results and raised its outlook.

Target has raised its full-year 2024 adjusted EPS outlook to a range of $9.00 to $9.70, up from the previous range of $8.60 to $9.60. This new outlook compares to an estimate of $9.36.

Analysts covering the retail behemoth provided their takes:

• BofA Securities analyst Robert F. Ohmes reiterated the Buy rating on Target, raising the price forecast to $195 from $190.
• Telsey Advisory analyst Joseph Feldman reiterated the Outperform rating, raising the price forecast to $195 from $190.

BofA Securities: The analyst increased the FY25 EPS estimate to $9.70 from $9.45, citing a strong second-quarter performance and anticipated ongoing strength in Gross Margin.

The forecast for the second half comps remains at +2%, the analyst adds. Despite a volatile macroeconomic environment, Ohmes sees recent comp trends to persist, driven by Target's enhanced value proposition and merchandising as it supports growth through the back-to-school and holiday seasons.

Ohmes expects the firm's gross margins to receive sustained long-term support from the expansion of sortation centers (currently 11 in operation) and growth in Roundel, which is anticipated to increase in the high teens this year.

Also Read: Target's Strong Q2 Performance Impresses Analysts, But Caution Remains Over Future Margin Pressures

The FY25 gross margin forecast includes only a modest benefit from shrinkage accruals.

However, Ohmes sees potential for additional upside from shrinkage if overall loss rates decrease year-over-year.

Telsey Advisory Group: According to Feldman, Target is poised to benefit from its value-driven approach and strategic initiatives, including private brands, new store openings, remodels, supply chain improvements, digital advancements like Drive Up, an upgraded loyalty program and the Target+ marketplace.

Additionally, the company continues to enhance the customer experience and product offerings through partnerships with popular brands such as Apple Inc. (NASDAQ:AAPL), Walt Disney Co (NYSE:DIS), Levi Strauss & Co (NYSE:LEVI), and Ulta Beauty, Inc. (NASDAQ:ULTA).

These efforts are expected to drive robust sales and earnings growth in the future.

For the third quarter, the analyst raised the EPS estimate by $0.01 to $2.35, driven by an improved operating margin of approximately 60 basis points to 5.8%, up from the previous 5.7%.

This increase was partly offset by a lower comparable sales forecast of 1.5%, compared to the previous 2.5% estimate.

For 2024, the EPS estimate was raised to $9.70 from $9.52.

TGT Price Action: Target shares are trading lower by 1.55% to $156.80 at last check Thursday.

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