Target Earnings: Better-Than-Expected Results Overshadowed by Management's Cautious Outlook

After digesting no-moat Target's fiscal 2024 fourth-quarter earnings release, we don't plan to alter our $135 fair value estimate materially. Results looked solid as comparable sales expanded 1.5%, outpacing our forecast for flat growth. And while its operating margin declined 110 basis points to 4.7% due to factors such as higher costs associated with digital fulfillment and wages, the performance still came in better than our 4.3% forecast. Despite the positive results, we plan to lower our forecast for fiscal 2025 comparable sales growth to about flat (from 2.5%), which is consistent with the firm's guidance for the full year.