U.S. retailers have a lot to look forward to as the weather warms up and Americans once again get out of their homes and hit the shops. Several of the country’s largest retailers have reported April quarter results this week and that is ginning up even more enthusiasm.
Among the analysts getting revved up for more gains among retailers is Lavesh Hemnani of Credit Suisse, who has resumed coverage on 17 retail stocks. Of that universe, only five were rated Neutral while 11 were rated Outperform. Only one stock on the list was rated at Underperform.
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We’re going to look at three stocks in some detail, but first, here’s Hemnani’s list, along with the stock’s rating and the Credit Suisse 12-month price target.
| Stock | Rating | Target |
|---|---|---|
| Academy Sports & Outdoors | Outperform | $39 |
| Advance Auto Parts | Outperform | $215 |
| AutoZone | Outperform | $1,437 |
| Bed Bath & Beyond | Neutral | $19 |
| Dick’s Sporting Goods | Neutral | $72 |
| Driven Brands | Outperform | $38 |
| Floor & Décor | Outperform | $122 |
| Home Depot | Outperform | $319 |
| Joann | Outperform | $16 |
| Lowe’s Companies | Outperform | $188 |
| O’Reilly Automotive | Neutral | $496 |
| Overstock | Outperform | $105 |
| Petco Health and Wellness | Neutral | $28 |
| Target | Outperform | $211 |
| Tractor Supply | Neutral | $180 |
| Walmart | Outperform | $150 |
| Williams-Sonoma | Underperform | $117 |
Home Depot
Home improvement giant Home Depot Inc. (NYSE: HD) hammered top-line and bottom-line estimates on Tuesday, posting EPS of $3.86m compared with a consensus estimate of $2.93, and revenue of $37.5 billion, compared with an estimate of $33.7 billion. U.S. same-store sales for the quarter were up 29.9% year over year. Shares have dipped by about 3% since the report.
Credit Suisse’s rating of Outperform and $319 price target for Home Depot are based on a forecast 23 times EPS multiple in fiscal 2022. Risks to the forecast include more moderate growth in the overall economy and could last longer than expected; investments/expenses “may be less variable than expected”; increased competition; and consumer uncertainties.
The stock traded down about 2% Wednesday morning, at $310.38 in a 52-week range of $234.31 to $345.69. The consensus price target is $337.89.
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Target
Target Inc. (NYSE: TGT) stock traded up more than 4% Wednesday morning, following the release of its first-quarter earnings before the opening bell. The company beat estimates on both the top and bottom lines. EPS totaled $3.69, topping the consensus estimate of $2.02 by $1.67. Revenue totaled $23.88 billion, well above the consensus of $21.13 billion. Same-store sales rose by 22.9% year over year.
Credit Suisse based its Outperform rating and $211 price target on a multiple of 22 times expected fiscal 2022 EPS. Risks include Target’s “reliance on sales to drive EBITDA improvement,” a competitive landscape and “structural business mix challenges.”
Target stock posted a new 52-week high Wednesday morning of $218.50. The 52-week low is $114.23, and the consensus price target is $217.96.
Walmart
Since reporting first-quarter earnings Tuesday morning, Walmart Inc. (NYSE: WMT) shares have added about 2.3%, as of Wednesday morning. Credit Suisse bases its Outperform rating and $150 price target on a multiple of 25 times Walmart’s estimated fiscal year 2023 earnings-per-share (EPS) estimate. The risks to the bank’s outlook are workplace closures continuing to affect Walmart’s customers, supply chain disruptions and inventory challenges.
On Tuesday, Walmart beat consensus expectations on both the top and bottom lines, with EPS of $1.69, compared with the estimate of $1.21, and revenue of $138.3 billion, against an estimate of $131.5 billion. U.S. same-store sales were up 6% year over year. Fiscal-year EPS guidance was raised to a range of $5.00 to $5.15.
The shares traded up about 0.3% Wednesday, at $142.40 in a 52-week range of $117.01 to $1.53.66, and the consensus price target on the stock is $161.85.
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