Morgan Stanley Raises Target's Price Target

Analysts at Morgan Stanley raised the price target on shares of Target Corporation TGT from $61 to $66 and maintained an Underweight rating.

Simeon Gutman finds that Target is performing better than expected and the company positively surprised with third-quarter results: "the better margin flow through in Q3 and the outlook for Q4 was unexpected, which calls for continued gains."

On the other hand, Gutman feels Targets fundamental picture is not taht wonderful.

"US EBIT dollars were down 5% as margins contracted 40 bps and the EBIT loss in Canada was north of $200 million. Gross margins were in-line with guidance but were still down 80 bps on a two-year stack,consistent with Q2."

Gutman also believes Target's Canadian segment will likely not become profitable for several years.

Shares of Target closed Wednesday at $72.16, up 0.08 percent.