Target added to ‘Stampede list’ at DA Davidson

DA Davidson lowered the firm’s price target (TGT) on Target to $108 from $115 but keeps a Buy rating on the shares. The firm has also added the stock to its “Stampede list”, citing “Equity/Debt Recapitalization” as a potential catalyst. The stock is down about 65% from its pandemic era high and down 34% year to date, trading at just 11.5-times forward consensus estimates, which is far below historical averages on an absolute and relative basis, the analyst tells investors in a research note. Under the leveraged buyout possibility, the acquirers would need to drive a 2.8% annual EBITDA dollar increase over the next five years to generate a required 25% five-year IRR, and while fundamentals remain challenged at Target, margins seem to be flattening out as guidance implies a better trend, the firm added.