Target Stock Scores Upgrade Ahead of Historically Bullish Week

Baird upped its rating on TGT to 'outperform' from 'neutral'

Andrea Kramer
Feb 14, 2018 at 10:11 AM
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Retailer Target Corporation (NYSE:TGT) scored an upgrade to "outperform" from "neutral" at Baird today, along with a price-target hike to $85 from $75, with the brokerage firm waxing optimistic on same-day delivery prospects and exclusive brand launches, among other things. TGT shares yesterday popped above their 10-day moving average for the first time since Jan. 24 -- a day after the stock touched a new annual high -- and could extend their rebound next week, if history is any indicator.

Specifically, Target stock has been among the best to own during Presidents Day week, according to recent data from Schaeffer's Senior Quantitative Analyst Rocky White. Looking back 10 years, TGT has ended the week higher 80% of the time, averaging a gain of 1.6%. Today, the security was last seen 1.6% higher to trade at $75.03, defying broad-market headwinds and a surprise drop in U.S. retail sales in January.

What's more, Target shares could benefit from an unwinding of skepticism on Wall Street, should the security extend its quest for new highs. Currently, just three of 18 analysts deem TGT worthy of a "buy" or better rating, leaving the door open for additional upgrades. Further, the average 12-month price target of $74.92 represents a discount to the stock's current perch.

A short squeeze could also be in the cards for the stock. Although short interest dipped 7.6% in the most recent reporting period, these bearish bets still represent nearly seven sessions' worth of pent-up buying demand, at TGT's average pace of trading.

Likewise, options buyers have been more bearish than usual. On the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), Target's 10-day put/call volume ratio of 0.94 is in the 87th percentile of its annual range. An exodus of options bears could also drive TGT shares to new heights.


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