Despite Near-Term Pressures, We Believe Market Sentiment Underestimates Target's Strength

Although no-moat Target has had a difficult fiscal 2022 amid rapidly shifting demand, sales mix challenges, and rising costs and competitive pressure, we believe market sentiment does not adequately credit its improving omnichannel capabilities or its growing efficiency. Reflecting these factors and the time value of money, we are raising our valuation to $177 per share from $167. We see opportunity in the shares for long-term investors comfortable with what should be a volatile fourth quarter and fiscal 2023 on account of macroeconomic pressures.