Wall Street is eyeing the retail sector as names like Target (TGT) report earnings that came in better than expected. However, the consumer remains under pressure and actively searching for value. TD Cowen Senior Research Analyst Oliver Chen joins the Morning Brief to share his outlook on Target, which he currently has a Hold rating on.

Chen notes he is "encouraged" by Target's strong second quarter results, which showed improvements in areas like apparel and general discretionary merchandise. He cautions that "the consumer remains choppy," stating he is looking for "continued consistency at Target" before fully endorsing the stock.

Examining the broader retail landscape, Chen explains investors are seeing clear "winners and losers." He highlights that consumers are willing to spend, "but they may or may not" as inflation continues to pressure household budgets and create "a very mixed bag" in the retail space.

"The real key to success in retail is value, the value ratio to trend and what's being trend-right. The off-price market has been an exciting sector that's been constantly taking share," Chen tells Yahoo Finance.

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This post was written by Angel Smith