TargetExpress Concept 'Gaining Traction' In Testing, Deutsche Bank Says

In a report published Tuesday, Deutsche Bank analyst Paul Trussell maintained a Hold rating on

, with a price target of $79, saying that TargetExpress was "gaining traction" in test stores. In the report Deutsche Bank noted, "At only 3 stores today and 9 by year-end, TargetExpress isn't in the fast lane to transform the company, but we see the small format as an avenue for brand-building among Millennials and a lab for new product/concept testing today, with opportunity for meaningful contribution in the long-term." Analyst Paul Trussell believes that TargetExpress has got off to "a good start" and should "gain traction with refined best practices." Target has two TargetExpress stores in California and one in the Minneapolis area. It has plans to open 6 more in 2015. "We applaud the measured approach, and see opportunity for expansion over the next several years, allowing TGT to access untapped urban and college markets," Trussell wrote. Last week,

and Target announced plans to develop 5- 10 TargetExpress stores over the next couple of year. Each of these would have a CVS/pharmacy. Trussell believes this is "a natural partnership." "We acknowledge it will take considerable time for a small format to gain the scale necessary to move the needle for TGT's sales and earnings, but think that in the meanwhile, TargetExpress provides a positive brand halo, allows for testing products/concepts especially with younger consumers, and serves as an omnichannel link in urban markets," the Deutsche Bank added.