On Thursday, Target Corporation's (NYSE: NYSE:TGT) stock saw a 1.7% rise with approximately 1.4 million shares traded, diverging from the daily average volume of 4.91 million shares according to InvestingPro data. This follows an upgrade of the company's stock from "neutral" to "buy" by Bank of America analyst, a move that deviates from the consensus "hold" rating among analysts.
They also raised the price target for TGT from $120 to $135 per share, suggesting a potential upside of 24%. This stands in contrast to the consensus prediction, which remains at $157 per share. The stock is currently trading at 12x 2yr forward earnings, indicating an improved risk/reward outlook according to BofA.
The analysts anticipates an increase in both in-store and online activities over the coming months. They predict a 5% rise in store footfall and an increase in digital traffic driven by factors such as Target Circle Week, the addition of Starbucks (NASDAQ:SBUX), increased drive-up sales, and an improved online shopping experience.
Potential catalysts that could drive an increase to his slightly above-consensus EPS estimates and result in P/E multiple expansion were identified. A positive shift in TGT's ticket comps is expected due to enhanced sell-through on reduced inventory levels and fewer promotions. This analysis aligns with InvestingPro Tips that highlight Target's high return on invested capital and the company's position as a prominent player in the Consumer Staples Distribution & Retail industry.
Despite the optimistic outlook, BofA also highlighted potential risks including margin pressures from labor costs and investments, aggressive competition from rivals, and the rapid growth of smaller competitors. The Wall Street consensus on TGT stock is a Moderate Buy, based on 13 Buys, 16 Holds, and no Sells in the last three months. The average price target stands at $146.21 per share, suggesting a potential upside of 31.86%.
InvestingPro data also indicates a 4.04% dividend yield and a 1.85% dividend growth in the last twelve months, reinforcing InvestingPro Tips that note Target's consistent dividend payments for 53 consecutive years. For more insightful tips and real-time metrics, consider exploring the InvestingPro platform here.
The company's stock has taken a significant hit over the last six months, with a -32.32% total return, as per InvestingPro data. Yet, analysts predict profitability for the company this year, and it has indeed been profitable over the last twelve months. This, coupled with the company's market cap of $50.96B USD, suggests a potentially promising future for Target Corporation.
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