Citi cuts Target stock price target to $120 from $133

On Wednesday, Citi analysts, led by Paul Lejuez, revised the price target for Target Corporation (NYSE:TGT) shares, decreasing it to $120 from the previous $133, while maintaining a Neutral rating on the stock. Currently trading at $117.14 with a P/E ratio of 13.63x, InvestingPro analysis suggests the stock is trading below its Fair Value, presenting a potential opportunity for value investors. The adjustment follows Target’s fourth-quarter results, which aligned with expectations after the company had previously released its holiday sales figures. The guidance for fiscal year 2025 (F25) was also within consensus estimates, a factor considered positive by analysts.

Despite these in-line results, Target’s management has signaled that the first quarter will experience some pressure, although the extent was not specified. Additionally, the company has decided to stop providing quarterly guidance due to market volatility. Worth noting, Target has maintained its position as a reliable dividend payer, with InvestingPro data showing 54 consecutive years of dividend increases and a current yield of 3.82%. Looking ahead, management has forecasted mid-single to high-single-digit earnings per share (EPS) growth for the longer term, which falls below the consensus growth expectation of 10% in fiscal year 2026 (F26). Notably, management did not reaffirm its previous 6% operating margin target, instead reporting a 5.2% margin for fiscal year 2024 (F24).

Target’s strategy involves continued investment in various areas, such as product innovation and fulfillment services, to bolster sales. However, these investments are anticipated to constrain margin improvement. Citi’s analysis suggests that fiscal year 2025 could be challenging for Target’s stock, given the competitive landscape. The retailer faces stiff competition from rivals like Walmart (NYSE:WMT), which continues to expand its market share.

The potential impact of tariffs on consumer spending, particularly for discretionary items, also poses a risk to Target’s sales and margin outlook for the upcoming fiscal year. Citi’s lowered price target reflects these concerns and the anticipated subdued sales and margin performance for Target in fiscal year 2025. With annual revenue of $106.57 billion and a market capitalization of $53.67 billion, Target maintains a strong market presence despite challenges. For deeper insights into Target’s financial health and growth prospects, investors can access comprehensive analysis and additional ProTips through InvestingPro’s detailed research reports.

In other recent news, Target Corporation reported its fourth-quarter 2025 earnings, surpassing analysts’ expectations with an earnings per share (EPS) of $2.41, compared to the forecasted $2.24. Revenue also exceeded projections, reaching $30.9 billion against an anticipated $30.65 billion. Despite these positive results, some analysts have adjusted their price targets for Target. BNP Paribas (OTC:BNPQY) Exane lowered its target from $103 to $100, maintaining an Underperform rating due to concerns about competitive pressures and margin challenges. Stifel also reduced its target from $145 to $130, citing weaker consumer confidence affecting discretionary spending, but maintained a Hold rating. Jefferies adjusted its target from $165 to $150 while keeping a Buy rating, noting confidence in Target’s long-term earnings growth targets.

Additionally, Target has outlined a strategic growth plan aimed at enhancing its multi-channel sales by 2030, focusing on digital capabilities and supply chain improvements. The company plans to reimagine key product categories starting in 2025, including gaming, sports, and toys, and expand partnerships with brands like Disney (NYSE:DIS) and Warby Parker (NYSE:WRBY). Target also aims to enhance its shopping experience through AI-powered search and data-driven personalization, along with expanding its Target Plus marketplace. Despite a slight sales decline in February, signs of improvement in discretionary spending have been noted, and Target remains optimistic about its growth trajectory.

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