Target and Walmart Take Divergent Paths After Earnings: Premarket Readiness Breaks Down Retail Stock Trading

There are a few downsides to reporting income after one of your industry peers. The main one is that the company that signals the first can set an extremely high bar for the second to be crossed.

This is certainly the case with Target Corporation TGT, which released the day after Walmart Inc. WMT released a resounding third quarter report. The corresponding price action in the issue makes it the day's premarket readiness stock.

Target, Walmart in harmony until today: Over the years, Target and Walmart have evolved in unison with the S&P 500 index.

Although Target hit its all-time high in November 2021 ($268.98), it peaked near that level in April ($254.87), when Walmart hit its all-time high ($160.77).< /p>

Since June, the problems have taken two opposite paths. The target ended in June at $141.22 and is now up 9% from that $154 level.

By contrast, Walmart ended June at $121.58, and at $148.50 it's up 22% since then. Of course, most of this divergence has taken place since Tuesday.

Street leans on retailers the wrong way: Even before Target added $6 on Tuesday to Walmart's better-than-expected third-quarter report, the issue was inflamed. Just six days ago, the show closed at $152.99 and ended Monday's session at $173.26 for a short-term gain of $20.27 or 13.2%.

Walmart was in the red in the six days leading up to its report, falling $4.40 or 3% ($142.79 - $138.39).

Target Third Quarter Report: Prior to Wednesday's opening, Target reported quarterly earnings of $1.54 per share, which beat consensus estimate by 27.7% analysts $2.13

In addition, the company reported quarterly sales of $26.52 billion, which beat analysts' consensus estimate of $26.38 billion by 0.52%< /p>

PreMarket Prep's view: When the issue was covered on the show, it was already deep in the red over $25 in the $153 zone.

"None of what was said in the report was good, but they'll come and buy the dip," co-host Dennis Dick said of Target.

"I wouldn't be surprised if it was in the $152 area. Fund managers scrambling and worried they've missed a major bottom in the market will come in and buy Target ."

The author of the article agrees with the "buy the dip" thesis, but identifies a buy zone a little lower than Dick's, but not by much .

Investors were alerted to a gap close to $151 from October 17. In addition, the previous day's close at $149.25 may also attract buyers.

TGT Price Action: After a much lower open ($149.89 vs. $178.98), the issue immediately bottomed out at $148.75 and broke is abruptly reversed. It continued to make new highs for the session, with the current one at $158.31 as of 12:15 p.m. EST.

The stock ultimately lost 13.06% on Wednesday, closing at $155.47.

The Target discussion from Wednesday's show can be found here:

Photo courtesy of Target.

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