Analyst Cuts Profit Estimates on Target

ALazard Capital Markets analyst on Thursday became the latest on Wall Street to cut profit estimates on Target Corp. after the discount retailer reduced December sales projections amid a weak holiday retail season.

Analyst Todd Slater called the Minneapolis-based retailer the "first casualty of the holiday season."

Target said Monday it expects December same-store sales growth to range between a 1% decline and a 1% increase, compared with previous guidance for growth of 3% to 5%.

On Wednesday, several analysts lowered fourth-quarter profit estimates, and Slater cut his estimates on Thursday by 5 cents to $1.25 per share.

"An increase in traffic in week three (during the final days before Christmas) proved too little too late," Slater wrote in a note to clients, but he recommended investors buy Target stock on any weakness.

"Although the earnings growth deceleration is likely to continue into first half of 2008 due to difficult comparisons and slowing consumer spending, we believe near-term earnings power is well above $4 per share in a more normalized environment, given the effect of a meaningful buyback program," he wrote.

The company plans to buy back $10 billion worth of shares over the next three years. Target also is considering selling its credit-card receivables business, which has "significant incremental value that could be monetized," Slater said.