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UBS expects Target Corporation’s (NYSE:TGT) partnership with Shopify (SHOP) will be a positive catalyst for the stock.
Analyst Michael Lasser said investors should think of it as a marketing relationship that will see Shopify (SHOP) sellers alerted to Target (TGT) as an outlet and be sent through the retailer’s typical vetting process for its third-party marketplace. The goal of Target (TGT) is to have a curated assortment of third-party sellers, rather than an endless assortment online.
Lasser said the partnership with Shopify (SHOP) shows that Target (TGT) is clearly leaning further into the marketplace to drive e-commerce growth. The deal is also seen as a sign that the retailer has levers to drive top-line growth through the remainder of 2024. In addition to having access to Shopify’s (SHOP) expansive merchant base, Target (TGT) will have the opportunity to improve the online shopping experience for its customers, according to Lasser. “This should allow the retailer to offer new/on-trend items, expand its addressable market, and potentially serve new customers,” he noted. “Plus, Target could implement its learnings from marketplace in its first-party business or even sell some 3P products in its stores,” he added.
Shares of Target (TGT) were down 1.46% in late morning trading on Tuesday. The dividend yield for new buyers of the stock is 2.99%.