Target continues to repair margin profile, says Baird

Baird notes Target’s stronger gross margin fueled a greater than 40% EPS beat in Q3 as enterprise-wide efficiency initiatives are already delivering tangible cost savings. Target “continues to repair its margin profile following FY22’s self-inflicted wounds,” says the analyst, who adds that turning the trajectory of traffic and sales “is the (more difficult) next step.” The analyst, who says that the encouraging profit performance in Q3 “strengthens our conviction in an eventual return to pre-pandemic EBIT margins,” reiterates an Outperform rating and $165 price target on the shares.