On Wednesday, Deutsche Bank made a significant adjustment to its stance on Target Corporation (NYSE:), shifting the stock’s rating from “Hold” to “Buy” and raising the price target to $206 from the previous $149.

The move comes as the bank anticipates several growth drivers for the retail giant, including expected sustained same-store sales (SSS) growth and earnings before interest and taxes (EBIT) margin expansion. These factors are projected to result in earnings per share (EPS) exceeding $10 in the foreseeable future.

According to Deutsche Bank, Target’s strategic initiatives are key to driving its top-line growth. These initiatives include a broader value assortment, such as a partnership with fashion designer Diane von Furstenburg and the introduction of cost-effective product lines. The company is also enhancing its loyalty program, launching a new membership program, and planning to open 300 new stores over the next ten years.

The bank acknowledged the competitive landscape of membership offerings, with established programs like Amazon (NASDAQ:) Prime, Walmart+, and Kroger (NYSE:) Boost. However, it sees potential in Target’s new membership approach, dubbed Target Circle 360, to generate a steady revenue stream, bolster customer loyalty and wallet share, and justify a higher valuation multiple.

Deutsche Bank also cited limited markdown risk, potential freight cost benefits, and a growing digital advertising business as margin support factors. The bank believes that despite Target’s stock price increase over the past three months, there is still at least a 20% upside potential from current levels. The assessment is based on Target’s valuation remaining lower than that of other staple retail peers, and the expectation that the stock’s performance will align with or potentially outperform market multiples.

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