BofA Securities ran against the recent trend of price target cuts for Target stock, with an upgrade and a double-digit target hike Thursday. Target shares jumped during trade.
The research note upgraded Target stock to buy from neutral and hoisted its price target to 135 from 120. The stock's risk vs. reward profile has improved with its recent pullback, and BofA sees potential upside catalysts for Target. The company's traffic could improve from "depressed levels" into fiscal 2024 and it has opportunities to improve gross margins, the firm wrote.
BofA is more positive than the broader views from analysts, which have largely cut 12-month price expectations for Target stock in recent reports.
Truist said card data suggests retail spending trends have softened at the margin over recent weeks in an Oct. 5 research note. However, the trends appear more stable than what investors might assume based on the underperformance from many retailers. Truist adjusted its price targets to reflect the retail sector's market multiple decline. The market multiple valuation method uses financial metrics from similar companies to value a business. Truist lowered its price target on TGT stock to 116 from 133 and maintained a hold rating on shares.
Elsewhere, Stifel cut its price estimates to 130 from 145 in a Sept. 26 research note. The firm's survey data showed decelerating spending intentions in mid-September after general improvements in July and August. Meanwhile, Stifel believes continued muted spending on discretionary goods will impact comparable sales growth for retailers, which will likely last through at least the holiday season. The firm believes Costco and Dow Jones giant Walmart are the best-positioned retailers to maintain share gains. Stifel kept its hold rating on Target stock.
Target stock jumped about 1.7% Thursday after surging more than 3% premarket. Shares are up nearly 5.5% so far this week and on pace for their best week since mid-June.
Target struggled this year and posted five consecutive earnings declines leading up to its Q2 results in August. Sales fell 5% in Q2 after low single-digit growth the five quarters prior. Meanwhile, retailers are facing a spike in organized retail crime and theft that has bitten into margins and pressured stocks.
TGT stock has tumbled 25.6% in 2023 through Thursday's close.
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