We View Target’s Omnichannel Suite a Plus, but Near-Term Headwinds Remain; Shares a Hair Undervalued

We don’t expect a material change to our $177 fair value estimate after unpacking no-moat Target’s fourth-quarter marks. Its full-year top- and bottom-line results of $109 billion and $5.98, respectively, outpaced our $108.4 billion and $5.43 estimates, but the 2023 outlook (comparable sales growth ranging from a low-single-digit decline to a low-single-digit increase and $7.75-$8.75 in diluted EPS) was disappointing. Shares edged up about 3% on the print, and while still offering a modest discount, we think investors should await a larger margin of safety.