Goldman Sachs Upgrades Shares of Target to Buy (TGT)

Goldman Sachs is out with a research report this morning, where it upgrades shares of Target TGT to Buy; it has a $62.00 price target on the stock. The GS analysts cited the framework of an improving economic environment for the middle class, which they believe TGT is the best-positioned discounter. While the analysts think that Wal-Mart WMT should also experience improving results over the coming year, its focus on the lower-end consumer will see less of a benefit from the economic tailwinds cited above. In addition, TGT's company-specific initiatives to drive top-line growth should drive outperformance versus peers. As for valuation, the analysts remarked, “At 12.9X consensus NTM EPS, TGT trades at a 6% discount to its three-year average NTM EPS of 13.8X and at a 13% discount to its five-year average NTM EPS of 14.9X. Relative to the S&P 500, TGT trades at an 8% discount, well below its five-year average premium of 6%. TGT also trades at a 4% premium to WMT, which is roughly in line with its five-year average of 3%.”