Is Target 'Amazon-Proof'?

Is Target Corporation (NYSE: TGT) immune from Amazon.com, Inc. (NASDAQ: AMZN)'s threat? According to analysts at MKM Partners the answer is yes.

MKM Partners' Patrick McKeever upgrades Target's stock rating from Neutral to Buy with a price target boosted from $58 to $69 following Target's "encouraging" second quarter earnings report. Perhaps the main takeaway from the earnings report is that investors should be willing to pay a premium for retailers that are "insulated from Amazon" — a small category Target has earned its way into.

Target's ability to insulate itself from Amazon will become "increasingly clear" over the coming quarters as some of the encouraging aspects of the second-quarter earnings report will gain traction, the analyst suggested. For instance, Target saw an acceleration in foot traffic and growth in digital sales while the new small store format is "working."

Meanwhile, Target saw consumers respond "enthusiastically" to some of its new brands including Cat & Jack, Pillowfort and Cloud Island, the analyst continued. Encouragingly, the company's introduction of new brands is just getting underway as management will introduce 12 new brands within two years.

Also, Target's acquisition of Grand Junction, a transportation technology company that specializes in last-mile delivery, merely adds to the company's ability to become a more formidable competitor to Amazon.

Finally, Target's strong performance as of late is similar to fellow retail rival Wal-Mart Stores Inc (NYSE: WMT), yet its stock trades 5.3 P/E points lower.

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