Should I buy Target shares after UBS raised its price target?

Target Corporation (NYSE: TGT) shares have advanced more than 30% since the beginning of January 2021, and the current price stands around $241. UBS remains bullish on this retailer as it sees Target well-positioned for success in the second half of the 2021 year, more importantly, beyond.

Fundamental analysis: UBS increased its price target on Target to $265

Target Corporation is the 8th-largest retailer in the United States that operates in more than 1,844 stores across the country. The company continues to improve its position on the market, and this month UBS increased its price target on Target to $265 from $210.

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UBS reported that the stock’s current price is still attractive despite the rise since the beginning of January 2021. Target should improve its position even more as the economy reopening continues and yield a sustainable improvement to the top and bottom-line growth.

“The market will see Target as structurally improved as its strong positioning becomes even clearer in upcoming quarters. Target is seen blowing right past concerns over the tough period of comparables just ahead,” said Michael Lasser, an analyst from UBS.

Positive news for shareholders is that the board of directors declared a $0.90/quarterly share dividend this month, representing a 32.4% increase from the prior dividend of $0.68.

Target reported its first-quarter results last month; total revenue has increased by 23.3% Y/Y to $24.2 billion, while the GAAP EPS was $4.17 (beats by $2.17). Total revenue has increased above expectations (+ $2.43 billion), and it is important to say that comparable digital sales grew 50%.

Comparable sales grew 22.9% vs. consensus of 10.7%, while same-day services (Order Pickup, Drive Up, and Ship) grew more than 90% in the first quarter. Morgan Stanley raised its price target to $250 on Target after the first-quarter earnings as the company demonstrated strong execution and achieved significantly higher levels of profitability.

The consensus Wall Street rating on Target Corporation remains bullish, and 21 out of 29 firms covering this company have a Buy-equivalent rating.

Technical analysis: Target shares remain supported

Target shares remain supported after better than expected first fiscal quarter results, and according to technical analysis, there is no risk of the positive trend reversal for now. Rising above $250 supports the continuation of the bullish trend, and the next price target could be located around $265.

On the other side, if the price falls below $220, it would be a “sell” signal, and we have the open way to $200.

Summary

Target shares continue to trade in a bull market, and the company should improve its position even more as the economy reopening continues. UBS increased its price target to $265 from $210 as it sees Target well-positioned for success in the second half of the 2021 year, more importantly, beyond.

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