Target likely to pull back on buybacks with data breach costs a factor

Target (TGT +0.2%) is likely to be less aggressive with its share buybacks this year as it recoups from an expensive data breach, according to analysts covering the retailer.

Fitch Ratings notes the company would have to risk its credit rating to borrow more money to stay on its original buyback track.

What to watch: Execs with Target will be asked during the firm's earnings conference call this week for hard numbers on what the data breach will cost it. Estimates range as high as $1.1B.

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Comments (7)
  • BlueOkie
    , contributor
    Comments (10729) | Send Message
    Makes no cents, the stock is getting cheaper, time to buy!!!!
    24 Feb 2014, 03:36 PM Reply Like
  • SteveTheHawk
    , contributor
    Comments (2170) | Send Message
    Sure it makes sense. If they need the cash to cover the data breach costs, they need the cash. Going further in debt just for the sake of buybacks is a bad idea, especially if (as Fitch says) it would tarnish their credit rating.


    Personally, I'm not all that enthused about buybacks. What I do worry about is dividends. I'm wondering if the div growth rate will slow down a bit, at least temporarily.
    24 Feb 2014, 03:40 PM Reply Like
  • Cygnusx3
    , contributor
    Comments (251) | Send Message
    Buy backs add up to exactly nothing over the longer term. Any increase in earnings as a the result of fewer shares is simply discounted by "analysts" anyway. Look at Apple with a $60 billion buy back program. No one cares.
    24 Feb 2014, 03:56 PM Reply Like
  • hiddenengr
    , contributor
    Comments (42) | Send Message
    Agree. That is because nothing ever trades how it should. The stock price is mostly influenced by news, fear, greed, and analyst. If the stock traded just off of fundamentals, it wouldn't be this low. Sometimes I hate that things work out this way, but then again, I only hate it because I got in above 60.
    If you look at just the fundamentals, TGT is cheap. I could care a less about the breech. That won't have any long term affects and will be forgotten just like everything else always is. In fact, I think it's a big old scandal. Not by TGT though, but by some other company. Possibly a company trying to get the credit card chips out there? I dunno.


    Buy backs do help, but they don't make a difference when the stock trades mostly off the things I mentioned above.


    I do believe they will increase the dividend in AUG probably in a range of .05-.07.


    One thing I noticed is that TGT's stock price is being manipulated big time right now. One of the reasons why I hate trading stocks compared to something like the futures. The market makers just move things around way too much in individual stocks. There are times that things sell and it makes no sense why they would be selling... hence, it's market makers doing their tricks.
    24 Feb 2014, 04:16 PM Reply Like
  • BlueOkie
    , contributor
    Comments (10729) | Send Message
    Let me take buybacks to a extreme. Let's say there were not gifts to exec's on options for stocks or gifts of stocks. All stocks were bought except two. You owned one - wouldn't that be nice? Buybacks decrease stocks which increases EPS which increases the stock price making the shareholders happy. If the company issues stock that dilutes things and shareholders are unhappy. Dividends are real money and I really like them.
    24 Feb 2014, 06:09 PM Reply Like
  • hiddenengr
    , contributor
    Comments (42) | Send Message
    I've seen stock offerings lower stock immediately by 10+% but I've never seen a buy back raise a stock like that. Take AAPL for example, they just offered a HUGE buy back, and I didn't see the stock do much at all.


    All things considered, TGT has a pretty low stock float compared to many companies which are in the billions floated.
    24 Feb 2014, 06:55 PM Reply Like
  • LongTruth
    , contributor
    Comments (202) | Send Message
    In theory, buy backs shouldn't move the stock price all that much. Essentially the market expects the company to return X% on equity. Buy backs just mean the X% is returned by lowering the denominator vs earning X% by increasing the numerator. Buy backs are good, if that is the best use of money at the time, and they are a temporary solution. If buybacks are offered forever, it means the company has no business prospects for growth.
    25 Feb 2014, 08:56 AM Reply Like
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