Target Corporation (TGT) shares rose 2% in pre-market trading Monday morning after Barclays upgraded the stock to Overweight with a $115.00 price target, which represents a 49% premium to Friday's closing price. The analyst believes that the retailer's existing supply chain dynamics put it ahead of Amazon.com, Inc. (AMZN) when it comes to one-day shipping. Futhermore, the analyst believes that Target has a roughly $140 billion opportunity to build market share across the apparel and home furnishings categories, where it has the greatest competitive advantages.
On Friday, Target shares fell more than 5% after Amazon announced a potential shift toward one-day shipping for Prime members. According to GlobalData Retail, the entire retail sector could feel pressure on shipping costs if the online giant introduces these new benefits. In addition to Target, Walmart Inc. (WMT), Dollar General Corporation (DG) and other retailers moved sharply lower during Friday's session in response to Amazon's move.
From a technical standpoint, the stock broke down from its bullish price channel on Friday to the 200-day moving average at $77.22. The price rebounded back above the 200-day and 50-day moving averages as well as the pivot point at around $77.93 on Monday morning. The relative strength index (RSI) remains somewhat oversold with a reading of 41.06, but the moving average convergence divergence (MACD) experienced a bearish crossover that could signal more downside ahead.
Traders should watch for some consolidation above the 50- and 200-day moving averages over the coming sessions. If the stock breaks out higher, the next major area of resistance is the prior price channel's lower trendline at around $82.00. If the stock breaks down, traders could see a move toward S1 support at $74.29 or S2 support at $68.33, although a move lower appears less likely to occur at the moment.
The author holds no position in the stock(s) mentioned except through passively managed index funds.