Target's turnaround plan appears to be working well, giving investors a compelling reason to buy the stock, HSBC says.

Analyst Joe Thomas upgraded the stock to Buy from Hold and raised his price target to $190 from $125 on Wednesday. He said the company's recent earnings for the fiscal second quarter, strong guidance, and growing foot traffic are reasons to believe there's potential for improved growth.

Target stock rose 0.6% to $157.29 Wednesday. Shares have climbed 63% this year, with much of that surge attributed to new CEO Michael Fiddelke. The stock has risen 51% since he took the helm in February, according to Dow Jones Market Data.

The stock upgrade comes after Target said Tuesday it would cut prices on nearly 2,000 items related to home, apparel, and accessories to help families find affordable options ahead of the holiday season.

The price reduction builds on the over 10,000 recent price drops Target enacted over the past year, the company said. The announcement, however, appeared to have disappointed investors: Shares closed down 1.3% at $156.43 Tuesday, while the S&P 500 dipped about 0.2%.

Thomas didn't address the latest price cuts, but he highlighted that growth in its fiscal second quarter, which ended Aug. 1, was primarily driven by foot traffic-rather than higher prices or customers spending more on each transaction. It's a good sign.

"This indicates to us that Target is rebuilding customer traffic and that its store base is not being materially cannibalized," Thomas wrote in a note Wednesday.

Fiddelke launched Target's revamped turnaround plan in March; the initiative aims to refresh product assortment, lower prices on some items, and rearrange store layouts as part of a sweeping effort to reverse a yearslong sales slump. Investors seem confident in the plan-they have sent shares up by 32% since Fiddelke unveiled the turnaround.

Thomas also cited confidence in Target's outlook for fiscal 2026, ending next January. Management raised guidance for the second time this year when it released its earnings Aug. 19: It now expects earnings for the fiscal year to range from $8.25 to $9.25 a share. The company previously anticipated earnings of $7.50 to $8.50 a share.

Though Target's apparel and home sectors continue to lag behind other categories, Thomas said the company's refreshed children's clothing and home updates show positive early progress.

The average rating on Target is a Hold, according to 43 analysts polled by FactSet. Of that group, 28% rate the stock a Buy.