Target: Bank of America downgrades stock, slashes TP
(CercleFinance.com) - On Wednesday Bank of America downgraded the Target stock to "neutral" (from "buy"), having slashed its targets from 235 dollars to 165 dollars (closing price yesterday about 157 dollars, +0.
In its comments, BofA said the US group is a victim of a changing industry that is seeing retailers stockpile inventory, and not just in home furnishings or apparel.
The broker notes that the upheaval comes at a time when Target is being forced to raise prices to cope with higher gasoline and other costs.
Bank of America expects uncertainty to continue in the second half of the year, however, as many other retailers are also forced to sell off inventory, which should weigh on Target's stock price.
In the long term, however, the analyst believes that the Minneapolis-based group remains well positioned, as illustrated by the increase in its in-store traffic last quarter (+3.9%) and the strength of its activity in regular purchase categories (food/beverage, home products, beauty), which should support its sales growth, he says.
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