Talking Numbers

Target has a bigger problem than its security breach: Strategist

Talking Numbers

Wall Street may be brushing aside Targets recently credit card debacle but it's not ignoring its overall performance, says one strategist.

After the accounts of 40 million credit card users at Target were compromised, sales at the chain were down 3% to 4% on the final weekend before Christmas compared to the same time in 2012. However, the company's stock is up 0.7% in the last five days, though it's up only 5% for the year compared to the S&P 500 index's 29%.

On CNBC's Street Signs' Talking Numbers segment, Chad Morganlander, portfolio manager at Washington Crossing Advisors, thinks the stock is a buy and that the recent crisis is not a huge issue for the stock, at least.

(Watch: Can Target win back customers?)

"I think that this is already baked into the stock price," says Morganlander, who sees revenue growth of 2% next year for Target. "This company is a value stock. We have this in our Rising Dividend portfolio."

"It's consistently growing, consistently profitable, and well-capitalized," he says. "We're looking at a company that's trading around 11 times free cash flow."

Nonetheless, Morganlander expects revenues will likely be "desperately, woefully disappointing" over the next couple of quarter. Still, he sees value and is a buyer of the stock.

Carter Worth, Chief Technical Strategist at Oppenheimer & Co., also believes Target's stock isn't much affected by the security breach, but only because it has other issues to contend with.

"The charts are terrible," says Worth. "The day-to-day action is not responding to this so-called security breach because I don't that's the problem. The problem is bigger than that."

(Watch: Mobile malware set to spread in 2014: Security pro)

Target moved up with equities and other retailers for much the past couple of years, Worth notes, but it underperformed over the second half of 2013.

"If it were cheap, people would be buying it," says Worth. "They're not. It's heavy. Or, as the old technical expression goes, the stock acts poorly."

To see the rest of the analyses by Morganlander and Worth on Target, watch the video above.

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