Unlock Premium Data: Up to 50% Off InvestingProCLAIM SALE

Deutsche Bank bullish on Target, sees EPS exceeding $10

EditorEmilio Ghigini
Published 03/06/2024, 05:24 AM
© Reuters.
TGT
-

On Wednesday, Deutsche Bank made a significant adjustment to its stance on Target Corporation (NYSE:TGT), shifting the stock's rating from "Hold" to "Buy" and raising the price target to $206 from the previous $149.

The move comes as the bank anticipates several growth drivers for the retail giant, including expected sustained same-store sales (SSS) growth and earnings before interest and taxes (EBIT) margin expansion. These factors are projected to result in earnings per share (EPS) exceeding $10 in the foreseeable future.

According to Deutsche Bank, Target's strategic initiatives are key to driving its top-line growth. These initiatives include a broader value assortment, such as a partnership with fashion designer Diane von Furstenburg and the introduction of cost-effective product lines. The company is also enhancing its loyalty program, launching a new membership program, and planning to open 300 new stores over the next ten years.

The bank acknowledged the competitive landscape of membership offerings, with established programs like Amazon (NASDAQ:AMZN) Prime, Walmart+, and Kroger (NYSE:KR) Boost. However, it sees potential in Target's new membership approach, dubbed Target Circle 360, to generate a steady revenue stream, bolster customer loyalty and wallet share, and justify a higher valuation multiple.

Deutsche Bank also cited limited markdown risk, potential freight cost benefits, and a growing digital advertising business as margin support factors. The bank believes that despite Target's stock price increase over the past three months, there is still at least a 20% upside potential from current levels. The assessment is based on Target's valuation remaining lower than that of other staple retail peers, and the expectation that the stock's performance will align with or potentially outperform market multiples.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.