Target stock price slides on profit warning

Shares of Target Corp. (NYSE:TGT) gapped more than 6% lower today after the retail giant issued a warning that profits are likely to be reduced this quarter due to the higher costs. 

Fundamental analysis: Investments in e-commerce

Target said today that it will extend its $2 an hour temporary wage increase until May 30. A month ago, the retail giant announced a $300 million investment in wages, bonuses, paid leave and benefits for its staff. 

The company’s CEO Brian Cornell said that lockdowns and social distancing measures have played into the hands of a retailer as the company’s previous investments in online shopping options are yielding benefits. 

Since the beginning of its first fiscal quarter from February 02, the retailer’s same-store sales have jumped 7%. Although online sales have doubled, Target warns that higher costs are likely to weigh on profits. 

Technical analysis: Shares slid lower, but recover

Following the profit warning, shares of Target fell around 7% in premarket trading on Thursday. However, the buyers seemed eager to pick up the stock near the $100 mark and push it to towards $105, recouping the majority of earlier losses. 

All in all, Target stock price trades nearly 8% lower on the week after recording two strong weeks. The price action is holding up relatively well given the overall situation with the COVID-19 pandemic. 

The buyers will target the December all-time high near $130 as their key prize while the 90 level will continue to act as a strong support in case of a deeper pull back. 

Summary

Shares of Target slid around 7% in the premarket trading session after the retailer issued a profit warning due to the higher costs associated with the coronavirus outbreak. The company also reported a surge in the same-store sales of 7% on the back of the strong e-commerce performance.