01:21 PM EST, 11/25/2024 (MT Newswires) -- Target ( TGT ) was reinstated among the top picks of Oppenheimer, which said in a note Monday that it sees a "very compelling risk/reward scenario" developing for the retailer following recent challenges.

The firm removed Target ( TGT ) from its top pick ranking in mid-October partly due to its "apparel clearance inventory observations." Oppenheimer analysts now see several key factors driving its bullish stance on Target ( TGT ), including shares at or around bottom, "overly negative" investor sentiment, and achievable Q4 guidance.

"We believe the updated [Q4] guide fully captures discretionary category headwinds, markdown risks, and the impact of a shortened holiday season," analysts said.

Oppenheimer said it remains "upbeat" about the company's longer-term prospects, projecting a conservative 5.3% operating margin recovery by fiscal 2026. Recent challenges faced by the company are mainly driven by discretionary category headwinds, including pandemic laps, compared with structural headwinds, the firm added.

Oppenheimer has an outperform rating on Target's ( TGT ) stock with a $165 price target.

Target ( TGT ) shares gained 4.4% in recent trading.

Price: 130.51, Change: +5.49, Percent Change: +4.40