Jefferies cuts Target stock price target to $120 from $130

On Wednesday, Jefferies analyst Corey Tarlowe adjusted the price target for Target Corporation (NYSE:TGT) stock, bringing it down to $120 from the previous $130, while maintaining a Buy rating on the shares. The revision follows Target’s first-quarter results, which did not meet the market’s expectations. The retail giant, currently valued at $42.38 billion, has seen its stock decline nearly 26% year-to-date, though InvestingPro analysis suggests the stock is currently undervalued. Despite a strong performance in digital sales and improvements in shrinkage that benefited margins, the retailer experienced challenges with weak in-store traffic and pressure from markdowns, which impacted its profitability. According to InvestingPro data, Target maintains strong fundamentals with a healthy 28.2% gross profit margin and an attractive P/E ratio of 10.5x. Want deeper insights? InvestingPro offers 8 additional key tips about Target’s financial health and growth potential.

The analyst noted that Target’s management is making progress in mitigating tariffs and has not ruled out the possibility of adjusting prices accordingly. Although the current valuation of Target’s stock is still considered attractive, adjustments to earnings estimates were necessary due to the company’s lowered guidance and the prevailing macroeconomic uncertainty.

Target’s digital growth has been a highlight, indicating a successful adaptation to the increasing trend of online shopping. However, the physical stores have seen less foot traffic, which is a significant concern for the company’s brick-and-mortar business model. Markdown pressure, often a strategy to clear inventory or compete on price, has also contributed to the reduced profitability for the quarter. Despite these challenges, Target maintains a strong dividend yield of 4.57% and has impressively raised its dividend for 54 consecutive years, as highlighted by InvestingPro research.

The analyst’s commentary suggests that while there are positive aspects to Target’s business, such as the strong digital growth and improved margins from shrinkage reduction, the company faces headwinds that necessitate a cautious outlook. The lowered price target reflects these mixed factors and the need to account for the broader economic landscape that could affect Target’s performance. InvestingPro data reveals that 15 analysts have revised their earnings downward for the upcoming period, though the company maintains a strong free cash flow yield and sufficient cash flows to cover interest payments.

In summary, the new price target of $120 set by Jefferies takes into account the recent quarter’s underperformance relative to expectations, the ongoing efforts to counteract tariff impacts, and the overall economic environment that could influence Target’s future financial results.

In other recent news, Target Corporation reported its Q1 2025 earnings, revealing a significant shortfall in both earnings per share (EPS) and revenue forecasts. The company posted an adjusted EPS of $1.30, falling short of the anticipated $1.65, and reported revenue of $23.85 billion, missing the forecasted $24.35 billion. This underperformance was attributed to a 3.8% decline in comparable sales and a 2.8% drop in net sales. Analysts from Evercore ISI maintained an In Line rating with a $100 price target, while William Blair upheld an Outperform rating, highlighting Target’s effective handling of market challenges. Despite these challenges, Target’s digital sales increased by 4.7% year-over-year, with same-day delivery services growing by 35%. The company also launched 10,000 new summer items and expanded brand collaborations. Looking ahead, Target maintains its full-year EPS guidance between $7 and $9, anticipating a low single-digit sales decline for the remainder of the year.

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