TGT
The bull case is getting louder
Target has spent a long time in the “looks cheap, but why?” bin. Morgan Stanley thinks that may be changing, saying there’s now a path to a credible improvement story as traffic, merchandising, and execution start to perk up.
Why investors should care
This isn’t just Wall Street doing its usual stock-pick karaoke. The firm’s Overweight rating and $145 price target imply about 21% upside, and the thesis is basically: if Target can keep cleaning up the basics, the market may start rewarding it again.
The not-so-secret sauce
The company’s profitability has held up better than the sales slump would suggest, thanks to margin discipline and a little help from higher-margin businesses that don’t involve stacking T-shirts in perfect rainbow order:
- membership revenue more than doubled in the fourth quarter
- marketplace revenue rose more than 30%
- Roundel advertising posted double-digit growth
- same-day delivery through Target Circle 360 climbed more than 30%
That mix matters because it gives Target more ways to make money even when traditional store sales are being moody.
Big picture
Target still has to prove this is a real turnaround and not just a decent week in an ugly stretch. But when a retailer starts getting credit for better execution instead of just surviving, that’s usually the part where the stock stops sulking and starts paying attention.