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On Thursday, DA Davidson adjusted its outlook on Target Corporation (NYSE:TGT) shares, reducing the price target to $125 from the previous $140, while still maintaining a Buy rating on the stock. The firm’s analyst, Michael Baker, noted that despite some positive aspects in Target’s recent performance, there were significant concerns that overshadowed the gains. According to InvestingPro data, Target currently trades at an attractive P/E ratio of 10.8x, suggesting potential undervaluation despite recent challenges.
According to Baker, although Target’s stock valuation reached a ten-year low in early April, the current price decline is not as steep as the 8%-20% reduction in non-GAAP guidance might suggest, indicating that the stock could have reached a point of stabilization. He mentioned that the market had already absorbed much of the stock’s damage. The stock has declined nearly 30% year-to-date, while maintaining its impressive 54-year streak of consecutive dividend increases, as revealed by InvestingPro analysis.
The analyst pointed out that while there are risks, particularly concerning the margin guidance for the rest of the year, the likelihood is that the most challenging period for Target may be in the past. Baker suggested that signs of improving trends would be necessary to attract value investors.
The revision in the price target is based on a 15 times multiple of the firm’s projected earnings per share (EPS) for the year 2026. Baker emphasized the need for evidence of positive momentum before a more robust investor interest can be expected, despite reiterating a positive stance on the stock’s potential.
In other recent news, Target Corporation has faced multiple adjustments to its stock ratings and price targets from several financial firms. BofA Securities downgraded Target’s stock rating from Buy to Neutral, slashing the price target from $145 to $105, citing concerns over persistent sales weakness and delayed recovery in comparable sales. Similarly, Telsey Advisory Group downgraded Target from Outperform to Market Perform, lowering the price target from $130 to $110 due to disappointing first-quarter results and a challenging macroeconomic environment. TD Cowen also reduced its price target for Target from $110 to $105, maintaining a Hold rating, and highlighted ongoing challenges such as declining consumer confidence and tariff-related uncertainties.
BMO Capital Markets adjusted its price target from $100 to $95 while retaining a Market Perform rating, focusing on Target’s declining comparable store sales and market share losses. CFRA made a slight reduction in its price target from $100 to $99, maintaining a Hold rating, and noted Target’s underwhelming first-quarter results, with comparable sales dropping 3.8% year-over-year. These revisions reflect the broader concerns about Target’s near-term financial performance and operational challenges.
Target’s management has revised its full-year EPS guidance downward to a range of $7.00 to $9.00, from the previously projected $8.80 to $9.80, amid weak sales trends and increased inventory. Analysts have highlighted potential risks related to tariffs and inventory misalignment, which could affect profitability and gross margins. Despite these challenges, some analysts suggest that Target’s growth in high-margin businesses and strategic adjustments may offer some margin stability in the longer term.
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