Deutsche Bank analysts have 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 outlook for 2024 leaving room for positive earnings revisions, ongoing traffic improvements and an expanding value range, we see TGT's top line on track to positively influence from the second quarter onwards.” , the 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 surpass $10 in 2024.
Additionally, despite currently trading at a lower valuation compared to similar retail companies, Deutsche believes TGT will align with or outperform the broader market valuation if it continues to execute its strategy effectively.
“We believe management is taking the right steps for future growth and see a path toward L/MSD comps, 6%+ EBIT margins and $10+ EPS in the not-too-distant future,” the analysts said.
The stock is currently valued below its counterparts in the retail sector; However, with strategies aimed at increasing revenue, maintaining strong profit margins and potential for new store openings, Deutsche anticipates “at least a 20% increase from current levels.”
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