Citi analyst upgrades Target on improving results

posted: 104 DAYS 16 HOURS AGO

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NEW YORK -A Citi Investment Research analyst said Wednesday Target Corp. has "all its ducks in a row" ahead of the holidays and upgraded the discount retailer to "buy" from "sell."

Analyst Deborah L. Weinswig said she expects the company's sales in stores open at least one year — considered a key measure of a retailer's financial health — to turn positive in the fourth quarter as the holidays approach. September was the first month the measure had been positive since October 2007.

Discounters, particularly Wal-Mart Stores Inc., have benefited from consumers switching to cheaper stores and focusing on necessities. But at Target, where more than 40 percent of revenue comes from nonessentials like funky T-shirts and bedspreads, the cheap-chic formula that once was its strength has hurt the retailer. That has forced the discounter to further expand into the food business as a way to drive shoppers into the store more frequently.

Weinswig said looking toward 2010, Target's results should get a boost from a greater focus on food through its "P-Fresh" format, lower apparel inventory levels and stronger sales in stores open at least one year due to improving fashion offerings.

"We also believe TGT has a long runway of productivity improvements ahead, driven by improved labor scheduling, rigorous expense line reviews and increased management accountability and in-store technology investments," she added.

She raised her price target to $61 from $44.

Target's shares rose 45 cents, or almost 1 percent, to $48.89 in afternoon trading.

2009-10-28 13:31:42