Early this morning, Target joined the parade of retailers releasing their August sales results. The retailer boasted that August same-store sales rose 6.1% on year, compared with a 2.8% rise reported in the same month last year. Analysts had predicted an increase of 5.0%. Target's August sales totaled $4.7 billion, up 11.6% from the year before. Looking ahead, Target forecasts September same-store sales to rise in a range of 4% to 6%. In the year-ago period, same-store sales at the discount retailer rose 6.7%.
Also this morning, chief rival Wal-Mart Stores (WMT) posted an August same-store sales gain of 3.1%, easily surpassing its original forecast of 1% to 2%. Analysts had expected an increase of 1.5%.
The same heavy optimism that we are seeing on Wal-Mart is also blanketing Target, though Target's technical picture definitely looks more appealing. The put/call open interest ratio for TGT rests at 0.90, which is lower than 70% of all those taken during the past 52 weeks. Meanwhile, 8 of the 11 analyst rankings on the retailer are a buy or better, leaving little room for potential upgrades.
Technically speaking, the stock appears poised to pop nearly 2% higher on the open after shedding 3.67% on Wednesday and falling below its 10-day and 20-day moving averages. The equity is still above support at its ascending 40-week and 50-week moving averages and the security's long-term uptrend remains intact, which would help to explain some of the optimism toward the shares.