Target Corporation (TGT) shares moved nearly 5% higher on Tuesday morning after the retailer reported better-than-expected fourth quarter financial results. Revenue was flat at $22.98 billion, beating consensus estimates by $70 million, and non-GAAP earnings per share (EPS) came in at $1.53, beating estimates by one cent per share. Comparable store sales rose a strong 5.3% during the quarter, beating expectations of an even 5% gain. These gains were led by digital sales that rose 31%.

The company expects full-year EPS of between $5.75 and $6.05, which was higher than the $5.61 per share that analysts expected to see. CEO Brian Cornell told CNBC that new small formats in places like New York have performed very well, while investments in house brands are driving market share gains across important categories. Investments made in fulfillment also appear to be paying off, with online pickup and same-day deliveries in some areas.

Technical chart showing the share price performance of Target Corporation (TGT)
StockCharts.com

From a technical standpoint, Target stock broke out from a rising wedge chart pattern to 200-day moving average and R2 resistance at around $76.80. The relative strength index (RSI) moved closer to overbought levels with a reading of 67.99, but the moving average convergence divergence (MCAD) could see a near-term bullish crossover after a prolonged sideways movement. These indicators suggest that the stock could see some near-term consolidation before resuming its trend higher.

Traders should watch for a breakout from the 200-day moving average and R2 resistance toward reaction highs of around $86.00 over the coming sessions. If the stock fails to remain above trendline and R1 levels at $74.75, traders could see a move lower to test trendline support at around $73.00 or pivot point support at $71.60, although the strong earnings are likely to keep the stock moving higher over the near term.

The author holds no position in the stock(s) mentioned except through passively managed index funds.