12:31 PM EST, 11/25/2024 (MT Newswires) -- Target's ( TGT ) fiscal fourth-quarter outlook incorporates certain risks heading into the key holiday shopping season, according to Oppenheimer, which remains upbeat on the retailer's long-term prospects.

Last week, the company announced that it expected to report per-share adjusted earnings of $1.85 to $2.45 with comparable sales seen coming in flat. The current consensus on FactSet is for non-GAAP EPS of $2.19 in the fourth quarter and same-store sales growth of 0.1%.

Target's ( TGT ) guidance fully reflects discretionary spending headwinds, markdown risks and the potential hit from a shortened holiday season, Oppenheimer said in a Monday client note. The brokerage said that the company's stores appear well merchandised for the holidays.

The company last week laid out holiday plans including lower costs for its Thanksgiving dinner and toys for under $20. Target ( TGT ) is "well positioned" for the holidays, Chief Operating Officer Michael Fiddelke told analysts at the time.

For the full year, Target ( TGT ) slashed its adjusted EPS outlook range to $8.30 to $8.90 from prior projections of $9 to $9.70 due to decelerating discretionary demand and cost pressures. However, Oppenheimer said that the company has the ability to drive comparable sales growth back to the low-single-digit range over the long term.

"We view investor sentiment as overly negative towards (Target's ( TGT )) longer-term prospects," analysts Rupesh Parikh and Erica Eiler wrote in the note. "We continue to view recent challenges as primarily driven by discretionary category headwinds including pandemic laps (versus) structural headwinds in the business."

Oppenheimer added Target's ( TGT ) stock back to its top pick list after removing it in October partially due to the brokerage's apparel clearance inventory observations. Shares appear to be trading at or near a bottom while the fourth-quarter guidance looks "achievable," Oppenheimer said. Target's ( TGT ) stock was up 4.8% in Monday trade, trimming its year-to-date loss to 8%.

The brokerage has an outperform rating on the retailer's stock with a 12- to 18-month price target of $165.

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