MINNEAPOLIS (dpa-AFX) - Goldman Sachs downgraded the rating of retailer Target Corp. Thursday to sell from neutral over concerns about its increasing competition with e-commerce giant Amazon.com Inc. Target's price target was reduced to $67 from $77.
It is expected that the retailer's efforts to compete with Amazon will result in sluggish sales and profits.
The retail industry has been struggling for long with the growth of e-commerce. Market share losses to online sales as well as the increased costs of managing stores have created challenges, along with redundant distribution and higher price transparency.
According to analysts, Target has fared better than most amid the shift to e-commerce, but the firm is facing growing competition with Amazon in apparel and consumables.
Goldman Sachs reportedly stated, 'Customers who indicated they prefer shopping at Target also marked that they often shop for apparel, books, health and wellness and cosmetics online - most of which are in Target's 'Signature Categories. As Amazon's offerings in these categories continue to expand, we are concerned about Target's ability to maintain its growth rates and market share given high Prime penetration of the customer base.'
Target announced Wednesday morning that comparable sales for the November/December holiday period dropped by 1.3 percent. The company has also lowered its fourth quarter adjusted earnings per share forecast to between $1.45 and $1.55, from prior expectations of $1.55 to $1.75. Full year adjusted earnings per share guidance was also reduced to between $5.00 and $5.10, from prior expectations of $5.10 to $5.30.
Target stock lost 2.18 percent on Thursday's trading to close at $65.39. In the extended trading, stock gained 0.03 percent.
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