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UBS lowers Target shares target, still cites buying opportunity

EditorEmilio Ghigini
Published 2024-05-23, 06:16 a/m

On Thursday, UBS adjusted its outlook on Target Corporation (NYSE:TGT) shares, lowering the price target to $185 from the previous $191 while sustaining a Buy rating for the retailer.

The adjustment comes after a review of Target's first-quarter performance, which, according to the firm, displayed more positive aspects than negative ones.

The firm's analyst believes that the recent dip in Target's stock price presents a favorable buying opportunity for investors. The analyst's perspective is that Target is one of the limited companies in the hardline, broadline, and food retail industry that shows a clear trajectory towards revenue and margin growth in the medium term.

Despite the anticipated ongoing volatility in the macroeconomic environment over the coming quarters, the analyst anticipates that Target's relative performance could potentially stand out.

The combination of Target's potential for improved performance and its currently low valuation multiples are cited as reasons for the positive setup for the stock.

The price target revision reflects the firm's analysis of Target's financial health and market position. The Buy rating indicates that the firm continues to view Target as a favorable investment, despite the lowered price target.

InvestingPro Insights

Target Corporation's recent stock performance and financial metrics provide a nuanced picture for investors considering UBS's revised outlook. The company's longstanding commitment to shareholder returns is highlighted by its impressive track record of raising dividends for 53 consecutive years, an InvestingPro Tip that suggests a stable and investor-friendly approach. Additionally, the stock's current position in oversold territory, according to the RSI, could indicate a potential rebound opportunity for investors eyeing entry points.

On the financial side, Target's market capitalization stands at $66.28 billion, with a P/E ratio of 17.46, reflecting a valuation that may appeal to value investors, especially when considering the company's low PEG ratio of 0.32 over the last twelve months as of Q1 2023. This ratio suggests that the stock is trading at a discount relative to its near-term earnings growth potential. Moreover, with a dividend yield of 3.07% as of 2024, the stock offers a tangible return for income-focused investors.

For those interested in a deeper analysis, there are additional InvestingPro Tips available, providing insights into Target's industry position, debt levels, and profitability projections. To access these tips, investors can visit the InvestingPro platform for Target at https://www.investing.com/pro/TGT. Additionally, with the use of coupon code PRONEWS24, investors can receive an extra 10% off a yearly or biyearly Pro and Pro+ subscription, unlocking even more valuable insights.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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