03:46 PM EST, 02/24/2025 (MT Newswires) -- Target ( TGT ) is expected to see "several sources" of tailwinds to its core 2025 earnings following a better-than-projected performance in the holiday season, UBS Securities said in a note e-mailed Monday.

The brokerage expects the retailer to generate earnings before interest and taxes of $6.19 billion and per-share earnings of $10.18 for 2025. Wall Street is looking for $5.82 billion and $9.26, respectively, according to UBS.

"We think (Target ( TGT )) could see several sources of tailwinds to its (full-year) EBIT," UBS analysts, including Michael Lasser, said in a note to clients. These are "some shrink recapture," growth in the company's Roundel ad business, and "lapping one-time in nature headwinds" from the second half of last year, the analysts wrote.

The brokerage expects Target ( TGT ) to see continued benefits from its cost-reduction program. "We think these drivers alone could add more than ($1 billion) to its (2025) EBIT," the analysts said. However, UBS expects the retailer to take a conservative approach with its guidance amid the ongoing macroeconomic uncertainties, according to the note.

Target ( TGT ) has the potential to stabilize its market share this year, UBS said. "From a macro perspective, we think discretionary retailers could see relief, as the recent wallet share shifts to services should moderate," the analysts wrote. Target ( TGT ) itself has "several levers" to improve its share in retail, including traffic momentum and an ongoing expansion of its marketplace, UBS said.

The company's shares were up 1.8% in Monday late-afternoon trade.

Last month, the company said it continued to forecast fourth-quarter adjusted EPS of $1.85 to $2.45, but raised its comparable sales growth projection to 1.5% from a prior expectation that it would be flat. "Our team delivered continued traffic growth and better-than-expected holiday-season performance," Chief Executive Brian Cornell said at the time.

UBS expects Target ( TGT ) to log EPS of $2.15 and comparable store sales growth of 1.5% when it reports fourth-quarter results March 4. The Street's views are for $2.24 and 1.2% growth, respectively, according to the brokerage. For the ongoing quarter, Target ( TGT ) is likely to guide conservatively, with flat to negative same-store sales and EPS around $1.70 to $2, which UBS said would be below the Street's $2.06 estimate.

UBS left its price target on the Target ( TGT ) stock unchanged at $170, with a buy rating.

"We believe the stock offers one of the most compelling risk-reward profiles in the hardline, broadline, and food retail sectors," the analysts said. "We think the retailer's opportunity for recovery, rich catalyst path, and inexpensive valuation make it a compelling stock to own heading into 2025."

Price: 126.51, Change: +2.24, Percent Change: +1.80