UPDATE: Stifel Upgrades Target On Intriguing Short-Term Opportunity

In a report published Monday, Stifel analyst David Schick upgraded the rating on

from Hold to Buy, and named a $76.00 price target. In the report, Stifel noted, “We are raising our rating and estimates on more optimistic near-term US and 2015 Canada inputs and ROIC inflection. Our checks suggest more vibrant store traffic and marketing could be occurring just as 4Q easy comparisons roll around. TGT seems to be more ‘on offense' of late – we believe the ads are getting noticed and they played prime mover in holiday period free shipping. "We like some recent “old school” TGT merchandising like Faribault Woolen Mills. TGT has recently underperformed real PCE (a 69% r-squared to historical comp) – and so current estimates imply some topline upside if management initiatives begin to close the gap (roughly 200 bp implied opportunity, see Figure 1). We also note August and September monthly unique visitors (measured y/y) showed positive inflection at TGT, relative to prior trends. Buyback could be additional booster ... we do not model any buyback in FY14 just yet, but TGT historically offers next year repurchase guidance in 3Qs (and we still model some buyback in FY15) – we think any share repurchase guidance would be incremental positive to the Street (and capex guidance should improve without spend on Canada rollout). "We are now modeling US comp of 2% for 4Q14, 1.5% for FY15 and 1.5% for FY16. We are also modeling $1.5 bn 2015 buyback and $2 bn 2016 buyback.” Target closed on Friday at $64.17.