By Sam Boughedda
In a wide-ranging note on lifestyle brands, retail and digital disruptors, Piper Sandler started coverage of Target (NYSE:TGT) and Walmart (NYSE:WMT) with Neutral ratings.
Piper Sandler set a price target of $190 per share on Target and $135 per share on Walmart stock.
On the market as a whole, an analyst at Piper Sandler said, "intensifying macro pressures, unpredictable spending shifts, and the ongoing balance between digital and physical sales reminds us of our favorite Wilson Philipssong – Hold On. Our almost two decades of consumer/tech equity research experience focuses on what margin structures and share gains can companies Hold On to (and drive outperformance) versus reversion to the mean. A return to stores has been a post-COVID surprise, and we think that a focused store fleet will be critical for new customer acquisition. With our core brands/retail coverage down 20% (simple average) and disruptors down 63% YTD, we remain selective, but believe we are approaching broadly attractive entry points."
The analyst stated they remain Neutral on Target and Walmart given potential near-term macro headwinds.
Focusing on Target, the analyst said they think "private label brands and same day services are a competitive differentiator and should help TGT capture share in grocery."
Meanwhile, on Walmart, the analyst stated, "excess inventory remains a pressure point, and inflationary pressures could compress grocery margins."