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Target Reaches BMO's Valuation; Rating Downgraded By Firm

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In a report published Friday, BMO Capital analyst Wayne Hood downgraded the rating on Target Corporation (NYSE: TGT) from Outperform to Market Perform, with an $85 price target. The stock is trading near all-time highs.

"Target announced Kathee Tesija, EVP and Chief Merchandising and Supply Chain Officer, will transition into an advisory role beginning July 6 and will remain in an advisory role for several months. While we do not see the announcement as a disagreement over strategic direction, we do see it as creating near-term leadership uncertainty internally and externally," Hood reported.

The analyst also expressed surprise regarding the announcement, while adding that although some changes can be expected when a new CEO takes charge, CEO Brian Cornell of Target had expressed confidence in the company's leadership team.

"We do not believe we can overstate her importance in developing Target's brand, style image in apparel and home with consumers, and developing the present segmentation strategy the company is pursuing," Hood stated, while adding," Filling the leadership role could take an extended period of time, as other retailers have found, due to scarcity of available industry talent."

The analyst also believes that this announcement is likely to be a precursor to a narrower organizational structure, in terms of responsibility. This would make the company more responsive.

"The departure of Ms. Tesija follows the company's March 10, 2015 announcement that 1,700 positions from its headquarters in Minneapolis would be eliminated and 1,400 vacancies would go unfilled," according to the BMO Capital report.

Latest Ratings for TGT

DateFirmActionFromTo
May 2017Gordon HaskettInitiates Coverage OnSell
Mar 2017Telsey Advisory GroupDowngradesOutperformMarket Perform
Feb 2017SusquehannaInitiates Coverage OnNeutral

View More Analyst Ratings for TGT
View the Latest Analyst Ratings

Posted-In: BMO Capital Wayne HoodAnalyst Color Downgrades Analyst Ratings

 

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