Cost-squeezing nearly every retailer is beginning to settle for Target as the chain discovers areas to grow, even during challenging economic times, Jefferies said. Analyst Corey Tarlowe upgraded the stock to buy from hold with a bullish target to $185 from $170. The new forecast implies an increase of just under 24% from Target’s last close. “While margins continue to face pressure from the release of excess inventory as well as higher supply chain costs and product cost inflation, we consider this The big ones are short-term difficulties,” he said in a note to clients. “Looking ahead to the next year, we believe TGT margins are likely to benefit from a reduction in self-inflicted price pressures related to excess inventory as well as drag on the supply chain. response and product costs rise as commodity prices and container costs decrease.” One of the biggest challenges Tarlowe noted for the company is inventory, but he said the company is starting to move forward. Inventory growth has outstripped sales growth over the past three quarters – a classic story for retailers as pandemic supply chain issues are resolved at the same time consumer demand began to decline due to inflation and the shift in spending from goods to services. But he noted executives say the company has been able to reduce ownership in areas where prices are needed to move inventory, making him confident of an improved outlook going forward. “We believe the majority of inventory-related issues are likely to occur after TGT and expect relatively lower downside risk than other retailers due to strategic initiatives company’s inventory,” he said. Similarly, he said the company’s biggest downward earnings revisions were also behind it. There are many advantages ahead, he said, as freight costs continue to fall and e-commerce becomes more efficient. The company will also benefit from expanding partnerships with brands like Ulta and Disney to drive sales growth. The company has an average consumer income of around $60,000, which could help shield the company from inflation challenges as he notes that higher earners have reported feeling unaffected as heavily as lower-income shoppers. In the same note, he assumed Walmart at buy and raised the price target to $165 from $161, implying a 25.7% increase from the last close. Retailers can reap the benefits as consumers switch to lower priced items and retailers as inflation continues to squeeze pockets, he said. Target’s stock was up 3.2% before the bell. It is trading down about 35.5% so far this year. – Michael Bloom of CNBC contributed to this report.