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On Thursday, CFRA analysts downgraded Target Corporation shares (NYSE:TGT) from a ’Buy’ to a ’Hold’ status, while also significantly reducing the price target from $147.00 to $100.00. Currently trading at $93.11, Target shares are near their 52-week low of $87.35, though InvestingPro analysis suggests the stock may be undervalued at current levels. This adjustment reflects concerns over a challenging economic landscape and escalating tariff risks.
The downgrade comes as CFRA analysts observe a stark shift in the macroeconomic environment over the past month. The stock has declined over 41% in the past six months, reflecting broader market concerns. Consumer sentiment has taken a downturn, and increased tariff pressure is expected to impact Target’s financials. The company, which imports approximately half of its merchandise, is seen as particularly vulnerable to these tariff risks, despite maintaining strong fundamentals with $106.57 billion in revenue.
In tandem with the rating downgrade, CFRA also revised their earnings per share (EPS) estimates for Target. The forecast for the fiscal year 2026 (ending in January) has been lowered from $9.16 to $7.12, significantly below InvestingPro’s current consensus estimate of $9.10. Furthermore, the EPS projection for fiscal year 2027 has been reduced from $10.08 to $7.69. The analysts anticipate that Target will likely have to revise its full-year profit outlook, which currently assumes around a 5% EPS growth and a modest operating margin increase.
The analysts pointed out that Target’s exposure to tariff risks is greater than its competitors, not only due to its reliance on imported discretionary goods but also because of a supply chain that is considered less sophisticated than those of its peers. Additionally, potential boycotts related to Diversity, Equity, and Inclusion (DEI) initiatives are seen as a possible downside risk to the company’s earnings estimates.
Despite these challenges, CFRA acknowledges that Target has made efforts to mitigate some of the near-term pressures by pulling inventory forward. This strategic move could potentially ease the impact of tariffs in the short term. Moreover, Target might experience a temporary uptick in sales as consumers attempt to make purchases before the effect of the tariffs is fully realized. The company maintains strong financial health with an 11% free cash flow yield and has raised its dividend for 54 consecutive years, demonstrating long-term resilience. InvestingPro subscribers can access 10+ additional insights about Target’s financial health and growth prospects in the comprehensive Pro Research Report.
In other recent news, Walmart (NYSE:WMT) has seen an increase in its market share among upper-income teens, particularly in the apparel, beauty, and food categories, as highlighted by Piper Sandler’s Spring 2025 Teen Survey. The survey shows Walmart’s strategic efforts to attract higher-income consumers are paying off, with notable increases in beauty and apparel purchases among upper-income female teens. Meanwhile, Target has launched a limited-time kate spade new york x Target collection, featuring over 300 fashion and home items, with many priced at $15 or below. This collaboration aims to merge kate spade’s playful sophistication with Target’s commitment to affordable design.
Additionally, Target has successfully closed the sale of $1 billion in notes due in 2035, with a 5.000% yield, as part of its broader financial strategy. The proceeds are expected to support general corporate purposes, including refinancing existing debt and funding capital expenditures. Costco (NASDAQ:COST) is urging its Chinese suppliers to lower prices in response to U.S. tariffs, a move that reflects the ongoing trade tensions impacting the retail sector. Lastly, Target announced a quarterly dividend of $1.12 per share, maintaining its long-standing tradition of returning value to shareholders.
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