Pros Like Target for Reasons Other Than Apple
“Fast Money” pros sounded bullish on Target — but not just because of plans to launch special Applemini-stores within 25 of its locations.
“I’m more excited not about the Apple Store,” said OptionMonster.com co-founder Pete Najarian. “I’m more excited about what the CFO talked about today, about some of the growth trajectory.”
In a presentation earlier in the day, Target said it expects to invest at least $1.5 billion in share repurchases in 2012.
It also expects to raise its annual dividend to $3 a share or more by 2017, if it meets its goal to grow annual earnings to $8 per share or more by then.
The company also confirmed published reports from last week that it was planning to open branded Apple Stores within its own locations, unveiling its new concept named, “The Shops at Target.”
“The buyback they announced today, too, will be very supportive,” trader Brian Kelly of Shelter Harbor Capital said. “I like Target.”
The recent performance of high-end stocks such as Tiffany and Williams-Sonoma was a potential concern in the sector, but not for Target’s new high-end strategy, said Sanford Bernstein analyst Colin McGranahan.
“We would certainly expect the upper-income consumer spending to slow,” he said. “There’s a big difference between a $500 bag at Coach and what Target’s doing.”
McGranahan, who maintained an “outperform” rating on the stock and a price target of $60 per share, also looked beyond lowered guidance for holiday sales.
“It was a dogfight over the holidays. You saw that everywhere. Anyone who was not super promotional, was not in that dogfight, got left to the sidelines,” he said. “Target decided, for one reason or another, not to get into the fight tooth-and-nail, and so they had a somewhat weak holiday.”
“We feel pretty comfortable with the underlying momentum in the business,” he said. “They’re continuing to do things that make sense for them, like these specialty stores and the Apple test.
Target shares rose 0.78 percent to $49.81, while Apple slipped 0.27 percent to close at $421.39.
- Apple-Target Deal Better for One Stock, Pros Say
- Is Apple the Answer to Target's Problems?
- Target to Test Apple, Other Shops Within Its Stores
- Target: Inside the Bullseye
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Trader disclosure: On Jan. 12, 2012, the following stocks and commodities mentioned or intended to be mentioned on CNBC’s "Fast Money" were owned by the "Fast Money" traders: Najarian is long AAPL; Najarian is long BAC; Najarian is long C; Najarian is long MSFT; Najarian is long INTC; Najarian is long YHOO; Najarian is long MOS; Najarian is long JAG; Cortes is long SO; Cortes is long KFT; Cortes is short Crude; Cortes is short MCD; Cortes is short QQQ; Cortes is short FSLR; Cortes is short XRT vs. S&P long; Weiss owns BRCM; Weiss owns EUO; Weiss is short AAPL puts; Weiss owns MOS; Weiss owns POT; Grasso owns ASTM; Grasso owns AVAV; Grasso owns BA; Grasso owns D; Grasso owns LIT; Grasso owns MHY; Grasso owns PFE; Grasso owns PRST; Grasso owns S; Grasso owns WFT; Grasso owns XLU
Shelter Harbor Capital is long IWM
Shelter Harbor Capital is long KRE
Shelter Harbor Capital is long XHB
Shelter Harbor Capital is long EWZ
Shelter Harbor Capital is long GLD
Shelter Harbor Capital is long SLV
Shelter Harbor Capital is short Aussie dollar
Shelter Harbor Capital is CDR
Shelter Harbor Capital is UBS
Stuart Frankel & Co and it’s partners own CSCO
Stuart Frankel & Co and it’s partners own CUBA
Stuart Frankel & Co and it’s partners own GERN
Stuart Frankel & Co and it’s partners own HPQ
Stuart Frankel & Co and it’s partners own HSPO
Stuart Frankel & Co and it’s partners own MU
Stuart Frankel & Co and it’s partners own NYX
Stuart Frankel & Co and it’s partners own PRST
Stuart Frankel & Co and it’s partners own WFT
Stuart Frankel & Co and it’s partners own XRX
Cox owns JPM
Cox owns BAC
Campbell & Company is long crude
Campbell & Company is short natural gas
Sanford Bernstein has received non-investment banking fees from TGT
UBS has received non-investment banking fees from SBUX
UBS makes a market in shares of SBUX
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