Maintaining its Outperform rating and a $165 price target, Oppenheimer has restored Target (TGT, Financials) as a Top Pick. The choice shows hope for the retailer's future despite recent disappointments like a dismal third quarter and a lower whole-year projection.
Target offers a "compelling risk/reward scenario," analyst Rupesh Parikh of Oppenheimer said. Key factors include a good starting position, fourth-quarter expectations seen as reasonable, advancement toward 6% operating margins, and a 3.52% dividend yield.
Under worse expectations, the company's shares has plunged 23%; Parikh notes transitory causes include less shopping days over the Christmas season, markdown concerns, and difficulties in areas of discretionary spending. These are considered as temporary problems; Parikh stresses confidence in Target's long-term viability.
“We believe the company is well positioned to capture share driven by digital efforts, store investments, merchandising success on the exclusive brand front, competitor liquidations over time, and partnerships with other brands and retailers,” Parikh said.
Parikh said that given the present valuation, investors should seize the chance to purchase the declining stock; Target is changing hands for $131.28 on the last look, up 5%.
