Prediction: Target sells credit

A deteriorating credit environment could make it more likely that Target will sell the remainder of its credit card receivables, according to Citigroup investment analyst Deb Weinswig. That possibility and nine others were listed in a report highlighting 2009 predictions. According to Weinswig, the weak performance of the credit segment in 2008 and continued headwinds in 2009 may lead Target to sell its remaining receivables, possible at fire-sale prices. JP Morgan Chase would be a likely buyer in our view given its significant current investment in the portfolio as well as its strong consumer credit business.

On May 19, 2008, Target sold a 47% undivided interest in its credit receivables to JP Morgan Chase for an initial investment of $3.6 billion.

As for some of Weinswig’s other notable predictions, look for falling membership income at warehouse clubs, increased private brand penetration at Walmart and deteriorating drug store profitability due to prescription drug pressures.