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Barclays' Matthew McClintock upgraded Target to overweight from equal weight and raised his 12-month price projection to $115 a share from $85. The new target represents a 49% surge from Friday's close of $77.12.
In a portion of the report entitled "Why the biggest bear on TGT finally upgraded the stock," the analyst goes on to say that the recent decline in Target shares after Amazon's said it was moving toward one-day shipping for Prime customers has gone too far. Target shares are down more than 5% in the last week.
"We have now decided with the pullback in the stock due to recent Amazon fears, our expected downside from this near-term view is meaningfully derisked," he wrote. Target "is already ahead of AMZN in same day delivery ... and has built a supply chain that fulfills e-commerce primarily from stores (where next-day delivery is much easier), which stands in contrast to most retailers."
The analyst had upgraded target to equal weight in January. Before that, Barclays had a sell rating going back to at least mid-2016.
Bigger picture, McClintock believes there's been a "narrative change" that means the stock deserves a higher valuation. He trumpets market share opportunities in apparel and home furnishings and says Target "is a leader in practically everything investors use to support other retailers that they like."
"The company is well ahead of most retailers in: 1) employee pay; 2) store experience ... 3) digital, and merchandising/private label," he said.
Target shares jumped 2% Monday in premarket trading following the call.
— With reporting by Michael Bloom