UBS Analyst Upgrades Target: What You Need To Know

UBS analyst Michael Lasser upgraded Target Corporation TGT stock from Neutral and raised its price target from $210 to $265.

On The Positive Side: Lasser stated the upgrade was inspired by the retailer's respectable financial performance as the economy moves into a post-COVID-19 pandemic era.

Lasser acknowledged there was "still skepticism embedded into the stock," but he argued its "modest valuation" especially when compared to its competition, also insisting "there's more to come" for the company as the year progresses.

"We believe TGT has distinguished itself in many ways over the last few years, but most importantly, it generated avg traffic growth of 4.8% over the last 13 Qs," he wrote. "This is on par w. HD (4.9%) & LOW (4.8%) and above COST (4.5%), showing how relevant it has become w. consumers."

Lasser added Target's ability to attract and drive consumer traffic ensured it is able "to generate a virtuous cycle where it attracts more compelling products (such as Levi's, limited-time designs, etc) & is able to invest more into its business."

Related Link: Stock Wars: Macy's Vs. Dillard's

Silencing The Skeptics: Lasser admitted that a "big unknown is what degree of TGT's profitability has been temporarily supported by the unique environment (strong sales, less mark-downs & promos)."

In his analysis, Lasser wrote that "skeptics" believed Target will not be able to maintain its current financial performance as the nation moves further away from the pandemic era.

Nonetheless, Lasser predicted that Target's product line-up "appeals to a wide consumer demographic," and he praised the company's "robust digital offering" for bringing in a wider range of customers.

He predicted Target will be able to "drive consistently positive" same-store sales, with profits being invested back into growing the business.

At last check, Target was trading at $235.55, slightly under its 52-week high of $235.60 and far from its 52-week low of $114.81.

(Photo by Mike Mozart / Flickr Creative Commons.)