With Target’s image and sales falling, its stock got another blow Monday.
The retailer has been suffering from a conservative-led boycott due to some of the so-called “pride” month items Target was promoting as well as the in-your-face nature of in-store “pride” displays. The company pulled back some displays and products, leading LGBT advocates to condemn it as well.
As of mid-May, as rumblings of a boycott were beginning, Target announced that its first-quarter sales were essentially flat, according to retaildive.com.
And now comes another blow as Target Corp.’s stock was downgraded by KeyBanc Capital Markets, according to MarketWatch. Target is now listed at sector weight, a reduction from its previous rating of overweight.
Target faces continued stock losses and a downgrade from KeyBanc Capital Markets as Congress’ debt ceiling agreement poses a headwind for discretionary spending, with students resuming loan payments. After already being downgraded by JP Morgan last week,… https://t.co/mBFUPBbtbU
— AM1_NEWS (@am1_news) June 5, 2023
“While we still believe in the LT [long-term] margin recovery story, we downgrade TGT to SW given increasing consumer headwinds over the next 12-18 months,” KeyBanc analyst Bradley Thomas wrote.
Thomas said the Aug. 30 resumption of student loan payments first paused during the pandemic is a “sizeable” headwind for consumer spending.
“We’ve gotten some questions if it was around recent trends at Target, I don’t think that helps the situation,” he said, according to Newsweek.
Shares fell another 2.03 percent Monday, according to Fox Business. As of Monday, Target’s stock price had fallen 20 percent this quarter.
Target shares plunge 2% as market cap down over $13 billion amid Pride backlash https://t.co/FRieNeIPEV
— Terri Green (@TerriGreenUSA) June 5, 2023
Do you think more woke companies are going to suffer?
Target’s market value has dropped more than $13 billion to $60.24 billion during the weeks of the boycott.
In his note, Thomas said Target might not fall much further, but is not likely to recover, either, according to MarketWatch.
“Given the recent selloff in shares, we believe NT [near-term] downside may be limited, but we see the growing risk of student loan payments as likely pushing out the margin recovery story at least another year, thus pushing us to downgrade,” he wrote.
Won’t be long before there are class-action lawsuits by shareholders against the company and board of directors for destruction of shareholder value
— Elon Musk (@elonmusk) June 2, 2023
Last week JPMorgan noted that a retrenchment in consumer spending, coupled with the impact of the boycott, led it to downgrade Target stock.
Former Target Vice Chairman Gerald Storch said the boycott tipped Target over the edge when it was already floundering, according to Fox News.
“Target’s decline in stock, — actually began on May 18th. That’s the day Walmart reported seven percent gain in comp store sales on the prior day. Target had reported flat sales, year flat at Target, up seven at Wal-Mart. There’s no way that comparison looks good,” he said.
Storch said Target’s issues run deeper than “pride” month.
“While there’s no doubt the boycott is part of the problem, if you read the reports about Target during this period and the analysts keep in mind related to the investors, who are the ones who are buying things about the stock or in this case probably selling picks amount of stock. They’re more concerned with the fundamental business issues,” he said.
This article appeared originally on The Western Journal.
