BoA: Target On Cusp Of Major Same-Store Sales Growth Cycle

Shares of Target Corporation (NYSE: TGT) are up 12.8 percent year-to-date. BofA Merrill Lynch’s Robert F. Ohmes maintained a Buy rating for the company, with a price objective of $95.

Analyst Robert Ohmes believes that Target is poised for robust growth and is at the beginning of a sustained multi-year acceleration in same store sales.

Growth Drivers

Target’s key initiatives in Home, Baby, Apparel, and other Signature Categories as well as the return of Household Formation are expected to be key drivers of SSS growth, Ohmes said. He added that Target is poised to benefit from an improving mid-cycle backdrop, given its middle income core customer base.

Target’s current stock valuation appears attractive and its EPS is expected to improve from $4.42 in FY15 to $4.70 in FY16 and to $5.20 in FY17.

Potential risks faced by the company include competition from various online players, execution challenges, continued expansion of branded off-price competition and operating margin pressures, the analyst stated.