Target (TGT) is making progress in revitalizing its topline, and further valuation multiple expansion should continue with sales growth and positive earnings revisions, Morgan Stanley said in a Thursday note.
The company is scheduled to report its Q2 results on Aug. 19.
The execution of Target's turnaround plan to revive its brand into 2027 will be critical, while CEO Michael Fiddelke appears to be focused on the right initiatives like style and merchandising, customer experience, and digital business, the investment firm said.
Comparable sales are improving, given easier comparisons with last year, and further improvement will mainly depend on merchandise differentiation, according to Morgan Stanley.
The brokerage estimates a 3% comparable sales growth in Q2, slowing from 5.6% in Q1, and about $2.46 in adjusted earnings per share, above the Street consensus.
Morgan Stanley has an overweight rating on Target, with a $150 price target.
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