Cowen’s analyst reveals his top retail stock ahead of earnings

If he was allowed to buy one retail stock right now, Cowen’s Oliver Chen says he’d go for Target Corporation (NYSE: TGT).

Target to report Q3 earnings this week

Target is scheduled to report its Q3 results on November 16^th. Consensus is for it to earn $2.14 a share this quarter versus a much higher $3.03 a year ago. Still, Chen said on CNBC’s “The Exchange”:

He recommends that you buy Target stock as it has upside to $120. That translates to a 22% premium on its current share price.

The big box retailer also pays a dividend yield of about 2.50%.

Target did well in fixing inventory issues

Other reasons cited for the constructive view include same-day pickup at the store for goods purchased online. A portfolio comprising over 45 private labels or what Target calls “owned brands” is a meaningful catalyst as well, Chen added.

Most importantly, he likes Target Corporation for how swiftly it navigated the issues on the inventories front.    

The department store chain is expected to see a 2.7% year-on-year growth in revenue this quarter. Versus its year-to-date high, Target stock is currently down about 30%.