Bank of America analysts, led by Robert Ohmes, upgraded Target (NYSE:TGT) to Buy from Neutral and increased its price target from $120 to $135. The analyst estimates that the company will see increased activities in its physical and online stores over the next few months. TGT shares traded higher in Thursday’s session as a result of the news.
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According to Ohmes, the recent sell-off of the stock makes for a buying opportunity, in addition to the company’s business upsides. “With the stock trading at just 12x 2yr forward earnings, we believe the risk/reward outlook has improved and see catalysts that could drive upside,” the analyst said in a note.
He estimates that foot traffic to Target stores will see a possible 5% increase in the last six months of the year. Likewise, Ohmes pointed to an increase in the company’s app as a sign that digital traffic will also see an uptick. In addition, he also listed Target Circle Week, the addition of Starbucks, increased sales from drive-up customers, and better online shopping experience as drivers of digital traffic.
However, the analyst noted the downside risks the company faces, including margin pressures from labor costs, investments, and the rapid growth of smaller competitors. Similarly, Ohmes mentioned that the company may face aggressive competition from rivals.
Is TGT a Strong Buy?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on TGT stock based on 13 Buys, 16 Holds, and zero Sells assigned in the past three months, as indicated by the graphic above. Furthermore, the average TGT price target of $146.21 per share implies a 31.86% upside potential.
