Morgan Stanley Upgrades Target After Recent Pullback

Target Corporation 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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