Deutsche adds Target to Fresh Money List, sees ‘at least 20% upside’

Deutsche Bank analysts added Target (TGT) to the Fresh Money List, their quarterly selection of top investment ideas expected to perform well over the next 12 months.

“With a conservative 2024 outlook that leaves room for positive earnings revisions, traffic improvements underway, and an expanding value assortment, we see TGT’s top-line on track to inflect positively starting in 2Q,” analysts said.

The analysts also identify several factors that could drive continued same-store sales growth and improve profit margins, projecting earnings per share (EPS) to exceed $10 in 2024.

Moreover, despite currently trading at a lower valuation compared to similar retail companies, Deutsche thinks TGT is set to align with or exceed the broader market valuation if it continues to execute its strategy effectively.

“We believe management is taking the correct steps for future growth and see a path toward L/MSD comps, 6%+ EBIT margins and $10+ of EPS in the not-too-distant future,” analysts said.

The stock is currently valued lower than its counterparts in the retail sector, however, with strategies aimed at increasing revenue, maintaining robust profit margins, and potential for further store openings, Deutsche anticipates “at least 20% upside from current levels.”

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