DA Davidson has confirmed its Buy rating for Target Corporation (NYSE: NYSE:TGT) with a steady price target of $190.00 as the firm's analysis highlighted Target's recovery after a challenging start to the year, noting a positive turn in the second quarter of 2024.
The retailer has shown an upside surprise in sales and margins, indicating progress on its path to restoring profitability levels seen after the post-COVID peak in 2021.
The report by DA Davidson pointed out several factors contributing to Target's improved financial outlook. These include a better product mix, enhanced inventory control, a reduction in shrink (loss of inventory), and stronger comparable sales, which are expected to help leverage fixed costs.
According to the firm, these improvements are paving the way for Target to achieve margins exceeding 6%. The analyst believes that if Target maintains a 6% margin, it could generate an earnings power of approximately $11 per share.
This projection supports the firm's Buy rating and the price target of $190, which is based on 17.5 times the estimated earnings per share (EPS) for the year 2025.
In the report, DA Davidson also touched upon the detailed results from the second quarter of 2024 and provided updated guidance for the company.
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