Media reports fuel share-price speculation
Shares of Target opened sharply higher on Monday after a weekend cover story in Barron’s speculated that the stock could hit $70. Shares began trading Monday nearly a dollar higher than Friday’s close of $52.32 before advancing modestly throughout the day as Reuters and Bloomberg both reported on the Barron’s bull case for Target shares.
“If the company's merchandising and price promotions succeed in driving traffic and lifting profits, the stock could hit $70 in a year,” was the tantalizing nugget the wire services pulled from the Barron’s story.
There wasn’t much new information in the article, which basically recapped some of the company’s strategies and was actually quite similar to a cover story BusinessWeek ran on Dece. 7, 2009 with the headline, “Look Who’s Stalking Walmart.”
Could Target’s share price hit $70? Sure it could. It could also hit $80 or $90 over time or possibly decline to $40 if there is a double-dip recession and Walmart corrects self-imposed merchandising strategies that contributed to recent weakness in its results. The operative word here is “could.” Anything is possible, especially in the near term with the economy on shaky ground, but forecasting that Target shares will reach a certain level within a specified time frame is a fool’s game even if the company has a lot going for it.