Target’s (TGT) merchandising and brand initiatives should help the retailer recapture traffic and share gains after reporting a strong fiscal Q4, BofA Securities said in an emailed note to clients Wednesday.
The investment firm raised Target’s price target to $190 from $160 and reiterated its buy rating.
Target faces steeper competition in same-day delivery as many large retailers also improved same-day offerings during the COVID-19 pandemic. Still, the company’s gross margin is expected to return to 6% operating margin in fiscal 2028, according to the note.
“We continue to expect [gross margin] expansion in [fiscal year 2025] as well as a comp sales & traffic inflection in [fiscal Q2] driven by easing comparisons and the expected success of TGT’s merchandising initiatives,” BofA analysts said. “We expect these benefits to be partially offset by expense deleverage, particularly in Q1 as we forecast a comp sales decline of 4%.”