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Why Target Hospitality Stock Just Jumped 16%

By Rich Smith - May 27, 2021 at 2:45PM

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Q1 earnings were a miss -- but Target's guidance is a hit with this analyst.

What happened

Shares of Target Hospitality Corp. (TH 0.50%), a specialty renter of accommodations to oilfield workers, exploded higher in Thursday afternoon trading, rising 16% through 2:10 p.m. EDT.

You can thank investment banking firm Stifel Nicolaus for that.

Oilfield worker working on a pipeline.

Image source: Getty Images.

So what

This morning, Stifel upgraded Target Hospitality stock from "hold" to "buy" and hiked its price target on the shares 50% to $4.50 apiece. Target stock only cost $3 and change at yesterday's close, so naturally, the stock price jumped in response to the upgrade.  

Stifel explained that in its view, Target's Q1 2021 results Monday were "stronger-than-expected," but that point is somewhat debatable. According to a report by, although Target exceeded expectations for Q1 revenues (collecting $45.5 million where analysts had forecast only $40.9 million), Target still managed to "miss" on profits, losing $0.14 per share instead of the $0.09 per-share loss forecast.  

Now what

What's beyond debate, however, is that Target Hospitality married these mixed Q1 results with strong guidance for the rest of this year. According to management, Target is on track to record revenues of anywhere from $260 million to $270 million in fiscal 2021 -- well ahead of the $235 million to $245 million it had previously been projecting and ahead of analyst estimates for the year as well.

As the saying goes, investors tend to be a forward-looking bunch, willing to forgive the occasional earnings miss so long as guidance looks promising. That certainly seems to be how things are looking with Target Hospitality stock today.

Rich Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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