Target Earnings: Can It Recover 2023 Losses?
Target Earnings: Can It Recover 2023 Losses?
By:Mike Butler
Traders are watching for the discount department store chain’s expected move relative to farther-dated timeframes
- Target reports quarterly earnings before the market opens on Nov. 15.
- The company has beaten earnings-per-share (EPS) estimates three of the past four quarters.
- Target missed revenue expectations last quarter but beat expectations the previous three quarters.
- The company is expected to announce an EPS of $1.48 on $25.24 billion in revenue.
- EPS and revenue expectations are slightly higher than last quarter.
Target earnings preview
Target (TGT) has had a rough 2023 so far, opening the year at $149.97 and reaching a high of $181.70 just a few weeks later. The popular catch-all retail store crumbled to a low of $102.93 in October. The stock currently sits at $108, down over 30% on the year.
In second quarter guidance, the company stated it expected sales to decline slightly for the rest of the year. That will be the focal point this quarter because the stock has been beaten up through the year and bullish investors are looking for any sign of light that might result in a bullish move in the stock.
With that said, it appears the market is placing emphasis on this earnings report in terms of the expected move relative to farther-dated timeframes. Looking at current implied volatility, we can see the expected move through next week is +-$8.45. Looking at the Jan. 19 cycle, we can see the expected move is just a bit higher at $11.32. Next week only accounts for seven days, where the January cycle accounts for 70 days. This is a massive difference in time, but only a small difference in the expected move.
All eyes will be on this earnings announcement based on this huge implied volatility difference between the weekly and monthly cycle here.
Bullish on Target stock for earnings
Target's stock price is near the low of the year, and we have the holiday season coming up. There's also a possibility of interest rates being cut next year, which shows us signs of inflation cooling down and that can be good for consumer spending. All of this combined may paint a pretty picture for bullish Target investors out there, at least in a long-term view.
Bearish on Target stock for earnings
Bearish traders may look to Target if they believe it will miss EPS and revenue expectations, or if guidance for next quarter isn't too convincing. The stock is near the lows of the year, but it's had a difficult time catching any sort of sustainable rally as well.
Tune in to Options Trading Concepts Live on Tuesday, Nov. 14 at 11 a.m. CDT for a full breakdown of earnings strategies for Target's quarterly announcement the following morning.
Mike Butler, tastylive director of market intelligence, has been in the markets and trading for a decade. He appears on Options Trading Concepts Live, airing Monday-Friday. @tradermikeyb
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