Bright and early on Wednesday morning, UBS issued a downgrade on discount retailer Target (NYSE: TGT). The brokerage cut TGT to Neutral from Buy, but kept its price target of $52. UBS attributed the downgrade to valuation and concerns surrounding a change in consumer spending and the impact of said spending on the company's recovery. This downgrade comes after the retailer hired a research firm to look into its reputation -- I guess they should have checked on their reputation with brokerages.Shares of the retailer are lower this morning thanks to the news, but there is reason to believe the retailer could enjoy a prosperous holiday shopping season. Hear me out, Target offers quality products at a reasonable price, making the retailer a good spot to find great deals. What's more, Target is constantly offering sales and coupons, making the deals even sweeter. These discounts are exactly what people will look for when trying to fill out Santa's list.
Technically, the shares are battling overhead resistance at the $49 level, but it appears that the stock should receive some support from its 10-week moving average (provided it can hold through today). This trendline could help steer the equity higher, as it has throughout the better part of the calendar year. Consider that TGT was trading in the $25 region in March and you can see how quickly the stock can mount a rally. Again, if the stock can weather today's downgrade, it could rally further. Apparently, UBS feels that way, as it kept its $52 price target on the stock.
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