Morgan Stanley Upgrades Target After Recent Pullback

Target Corporation (NYSE: TGT)’s recent pullback is more on the mark for Morgan Stanley, which upgraded the stock.

The Analyst

Morgan Stanley’s Simeon Gutman upgraded Target from Underweight to Equal-weight with a $67 price target.

The Thesis

Morgan Stanley sees less downside following a drop of about 15 percent in the value of Target’s stock.

“We still have concerns around TGT’s medium-term margins, but they seem to be reflected in the stock’s below-average valuation and risk/reward now looks more balanced,” Gutman wrote in a Monday note to investors.

The stock had run up in the last couple of years, but pulled back in the past month.

Gutman also likes Target’s emerging story as a retail “survivor,” along with a few other retail giants, as other smaller operations struggle to compete amid the shift to online buying. Target has made investments to promote traffic in-store and online and reduce costs and its top-line growth has been reinvigorated.

Price Action

Target's stock traded up 1 percent at $711.54 per share on Monday morning.

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