Morgan Stanley Says Target's Near-Term Setup Is 'Decent,' Acknowledges Downside Risks

In a report published Thursday, Morgan Stanley analyst Simeon Gutman commented that

story is at a "critical juncture" ahead of next weeks fourth quarter release which will likely contain updated financial goals. Gutman stated that the market has become "somewhat agnostic" on valuation in general which may bode well for Target investors. Target's story is now "exciting" with a new CEO and its recent pull out from Canada. In addition, the stock is under-owned and less expensive than

. As such, the analyst stated that shares can build on recent momentum and "grind higher" into the earnings print. However, Gutman added that he is "not comfortable" with bull case assumptions and cautioned investors not to "get excited" over the U.S. only turnaround story with a healthy dividend yield. The analyst also argued that while EBIT margins are expected to modestly rise over time, it appears to already be reflected in estimates and the stock. Shares are Underweight rated with a $74 price target.