NEW YORK (TheStreet) -- Shares of Target Corp. (TGT) are lower by 0.53% to $84.05 in pre-market trading on Friday, following a rating downgrade to "market perform" from "outperform" at BMO Capital.

The firm said it reduced its rating on the consumer goods retail giant as it believes a shift in merchandise and supply chain management will add near-term risk.

BMO has an $85 price target on Target stock.

"Target announced Kathee Tesija, EVP and Chief Merchandising and Supply Chain Officer, will transition into an advisory role beginning July 6 and will remain in an advisory role for several months," BMO said in an analyst note.

"While we do not see the announcement as a disagreement over strategic direction, we do see it as creating near-term leadership uncertainty internally and externally at a time when the stock is trading near its 52- week and all-time high and are lowering our rating," the note continued.

Separately, TheStreet Ratings team rates TARGET CORP as a Buy with a ratings score of B+. TheStreet Ratings Team has this to say about their recommendation:

"We rate TARGET CORP (TGT) a BUY. This is driven by some important positives, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its revenue growth, largely solid financial position with reasonable debt levels by most measures, solid stock price performance, growth in earnings per share and increase in net income. We feel its strengths outweigh the fact that the company shows low profit margins."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • TGT's revenue growth has slightly outpaced the industry average of 2.1%. Since the same quarter one year prior, revenues slightly increased by 2.8%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • The debt-to-equity ratio is somewhat low, currently at 0.90, and is less than that of the industry average, implying that there has been a relatively successful effort in the management of debt levels.
  • Investors have apparently begun to recognize positive factors similar to those we have mentioned in this report, including earnings growth. This has helped drive up the company's shares by a sharp 41.72% over the past year, a rise that has exceeded that of the S&P 500 Index. Turning to the future, naturally, any stock can fall in a major bear market. However, in almost any other environment, the stock should continue to move higher despite the fact that it has already enjoyed nice gains in the past year.
  • TARGET CORP has improved earnings per share by 13.5% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. During the past fiscal year, TARGET CORP increased its bottom line by earning $3.83 versus $3.07 in the prior year. This year, the market expects an improvement in earnings ($4.63 versus $3.83).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Multiline Retail industry. The net income increased by 51.9% when compared to the same quarter one year prior, rising from $418.00 million to $635.00 million.
  • You can view the full analysis from the report here: TGT Ratings Report

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