ISI Group Reiterates on Target Corporation Ahead of Investor Day

In a report published Thursday, ISI Group analyst Greg Melich reiterated a Buy rating and $70.00 price target on Target Corporation TGT. In the report, ISI Group noted, “Target's October 30th Investor Day is a chance to update long term goals, as well as outline strategies for turning the traffic and winning the hearts/wallets of Canadian shoppers. Target's long term path to prosperity involves driving sales productivity and holding EBIT margins, with a modest top-line improvement likely as payroll tax cycles. That said, our August downgrade to Buy was a recognition that eCommerce pressures are secular – see Ten Potential Positives, Two Big Risks on 7/7 for more on traffic concerns. What could move the stock is frequency driving initiatives to narrow a 40% sales/ ft deficit vs. Walmart, raising buybacks/ dividends, or plans to jump-start Canada. Inside we deep dive category trends, multi-channel progress, and the Canadian market/competitor overlaps/ store demographics inside. Trading at 13x our CY14 EPS (20% dsct to peers) TGT reflects much of the risk that comps languish with upside to $70+ if traffic turns, and FCF inflects.” Target Corporation closed on Wednesday at $64.27.