KeyBanc said a more cautious consumer that's more keen on budgeting coupled with macro headwinds will hinder Target's long-term recovery.
KeyBanc thinks a resumption in student loan repayments in the third quarter will slam Target's margins. The firm downgraded Target on Sunday to sector weight from overweight. Target's stock is down nearly 11% from the start of the year and more than 19% over the past three months. The company's latest quarterly results showed Target struggled to grow sales year over year. Executives also signaled sales for future quarters would remain stunted.
And analyst Bradley Thomas said a more cautious consumer that's more keen on budgeting coupled with macro headwinds will hinder Target's long-term recovery — especially as student loan payments resume later this year . "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," Thomas said.
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