Cowen: 5 Reasons Target Will Outperform

Cowen offered five reasons to warrant a bullish rating on retailer Target Corporation TGT after holding a neutral stance on the stock for more than two years.

The Analyst

Cowen's Oliver Chen upgraded Target from Market Perform to Outperform with a price target lifted from $90 to $100.

The Thesis

The bullish case for Target's stock is based on momentum across five key areas, Chen said in a note.

Target improved its perception of being a retailer where shoppers can run in for quick trips. Shoppers now understand this can be accomplished at good value with the recent Run and Done marketing campaign cited as a key contributing factor.
Target continues to work on its image as being one of the easiest places to shop online and offline. The company is still in the early ages of building out its e-commerce platform but seeing positive results. For example, digital sales rose 35 percent in the first of 2018 with expectations for a 30 percent or more growth for the full year 2019.
Management's focus on private label brands is generating more loyal shoppers and helps the company stand out in a competitive retail environment.
Target should benefit from the Toys 'R' Us closure as around 96 percent of all closed toy stores are within 10 miles of a Target location.
Cowen's fiscal 2018 EPS estimate of $5.51 is above the Street's $5.41 per share and the high-end of management's guidance of $5.30 to $5.50 per share guidance. This creates the likelihood of upward EPS revisions as the company's momentum becomes more apparent.