Going Head-To-Head With Target And Wal-Mart? Omni-Channel Sales

In a report rolled out Wednesday, analysts at Cowen raised the price target for Target Corporation TGT from $85 to $90. A recent survey conducted by the firm shows robust online conversion upside potential. They believe that Target's "scale IT investment ($1B IT capex is ~50% of total capex) combined with a higher HHI customer demographic will drive faster omni-channel transformation," when compared to Wal-Mart Stores, Inc. WMT.

Despite the differences, the report said that both companies are excelling at omni-channel capabilities. Having said this, the analysts think Target's "more nimble size allows agility to drive sustainably higher online sales growth of +40% vs. WMT's ~20% and result in higher e-com penetration vs. ~3% currently."

While they acknowledge Wal-Mart's pure scale, the analysts still believe Target's "leading mobile app (Cartwheel), ship-from-store, & buy-online, pickup in store should drive continuing growth."

Although both companies are performing well and boasting strong conversion rates, Cowen continues to prefer Target over Wal-Mart in account of "improving execution in signature categories, digital strength, improved marketing, and the healthier US consumer [which] should drive positive traffic & prospects for comps upside in 2015."