Business Insider article Target’s stock price has surged since the retailer announced a massive buyout of its clothing and accessories business in August.
The stock has gained more than $1 billion, or about 12%, since the deal was announced, and its value is now more than six times its original price.
However, Target CEO Brian Cornell said the company is not expecting to see the stock rise much in the short term.
“We’ll have to see how the stock performs in the coming weeks and months.
The first quarter we’re anticipating some modest gains, but we’ll see how it evolves over the next few months,” Cornell told CNBC’s “Squawk Box” on Thursday.
The retailer also has $500 million of debt to service.
The debt is expected to be paid off in early 2019, and the company has said it expects to post $500 billion in annual sales by 2021.
The stock has soared from its IPO price of $24 per share, a price that was far more expensive than the S&P 500’s market cap of $4.2 trillion.
Cornell noted that Target’s acquisition of Target stores was expected to bring a number of benefits to the company, including increased inventory and a reduction in the need for seasonal and store closures.
He also noted that the buyout will help the company boost sales, but that the company won’t make a profit on the sale of its merchandise.
Cornel also pointed out that Target is already profitable, and that he expects the stock to go up even more once the acquisition is complete.
“The bottom line is we have a very good long-term business plan, which is about $4 billion a year and we are seeing strong sales growth.
So we’re confident that we can continue to build that business,” he said.