Bernstein analyst Zhihan Ma has maintained their neutral stance on TGT stock, giving a Hold rating on February 26.
Zhihan Ma has given his Hold rating due to a combination of factors that reflect both potential opportunities and challenges for Target. On the positive side, Target is experiencing favorable comparisons in sales and gross margins, and there is potential for growth if the company can shift its sales mix back to high-margin discretionary categories like apparel and home goods. Additionally, Target’s current trading price is significantly below its historical average, suggesting room for valuation recovery if the company can improve its brick-and-mortar sales and gross margins.
However, there are notable concerns that temper the optimistic outlook. Target faces increased competition from e-commerce and other retail formats, which has impacted its market share in key categories. The company also trails its competitors in pricing, which could necessitate further investment in pricing strategies and promotions to boost sales. Furthermore, the growth of e-commerce poses a challenge to margins, as Target’s smaller scale compared to competitors makes profitability in this area difficult. These factors contribute to a cautious view on Target’s medium to long-term prospects, justifying the Hold rating.
In another report released on February 26, J.P. Morgan also maintained a Hold rating on the stock with a $146.00 price target.