Target stock (NYSE:TGT) investors haven’t seen a new bottom since June, despite the larger equities market’s efforts to reverse the lows that have caused so much harm in recent weeks. While shares are still down approximately 35% from where they began the year, the fact that they are up 15% in the last four months is the more important narrative. And based on yesterday’s new Jefferies team assessment, it seems things are set to get much better.

Market Analysis of Target Stock

Analyst Corey Tarlowe raised his recommendation on target stock (NYSE:TGT) from Hold to Buy. He is confident about Target resolving its continuing margin difficulties, which have been exacerbated by inventory expansion lagging sales growth for the last three quarters. He added that inventory is already reduced in sectors that generally need margin-squeezing markdowns, which speaks well for overall growth.

“While margins continue to suffer pressure from the clearance of excess inventory as well as increased supply chain expenses and product cost inflation,” he said in a letter to investors, “we see these as mostly near-term concerns.” Looking forward, we anticipate Target’s margins will gain from absorbing self-inflicted markdown pressure from excess inventory and absorbing increased supply chain and product expenses as commodity prices and container costs fall.”

However, target stock (NYSE:TGT) is not without danger. As inflation readings continue to terrify investors with higher-than-expected figures, any firm with a semblance of exposure to consumer spending has taken a beating. Target, with its market position as a middle-of-the-road shop that is more upscale than Ross (NASDAQ: ROST) but not nearly Macy’s (NYSE: M), falls squarely into this category. As a result, 50% of haircut shares have already been experienced since reaching an all-time high in November.

Target Stock: Positioning in the Market

It’s not only Jefferies who sees an opportunity here. KeyBanc Capital Markets made similar remarks last month, with similar hopes for Target stock (NYSE:TGT) to gain up steam heading into the holidays. Bradley Thomas and his team launched coverage with an Overweight rating and a $200 price target, implying significantly more potential than Jefferies. “While investors may find superior growth prospects in smaller firms, we think both Walmart and Target are in the greatest competitive posture of the last decade, given the pandemic’s driver of e-commerce becoming much more relevant,” Thomas said. “

This is good reading for those of us on the sidelines since the technical setup is now supporting the long thesis. Though shares sank throughout the first part of this month, they never approached June’s low, giving investors a positive double bottom to support any position initiations around here. Let’s see whether the momentum generated by yesterday’s news can be sustained throughout the week and into November.

Featured Image – Megapixl © Timonschneider

Please See Disclaimer