The left-back has represented England at Under-19, U20 and U21 level and is viewed as a long-term prospect at St Mary’s.
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After starting the first three matches of last season, Targett was restricted to five Premier League appearances by a troublesome hamstring injury.
However, the defender has returned from surgery to start two games in pre-season as he looks to challenge Ryan Bertrand for a starting berth.
“I’m really happy to sign. I’ve been at the club since I was eight so to extend my time here is only a good thing,” Targett said.
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“I think the injury has only helped me improve physically and mentally. I think I feel the best I’ve ever felt.
“I’ve come back from it all and got my fitness back, I am feeling fitter and stronger so it’s all positive at the moment.”
Targett will hope to be involved when Southampton open their Premier League campaign at home to Swansea City on August 12.
Mauricio Pellegrino’s side have one final friendly scheduled before that match as they host Sevilla on Saturday.
