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Investing.com - Piper Sandler has reduced its price target on Target (NYSE:TGT) to $85.00 from $94.00 while maintaining a Neutral rating on the stock, citing challenged and volatile comparable sales trends. The stock currently trades at $86.08, near its 52-week low of $85.30, with InvestingPro data showing Target appears undervalued compared to its Fair Value assessment.
The retailer reported third-quarter comparable sales of -2.7%, which fell below market expectations, despite adjusted earnings per share beating sell-side estimates due to a better-than-expected tax rate and share buybacks. InvestingPro data reveals management has been aggressively buying back shares, while the company’s revenue declined 2.16% over the last twelve months.
Target has lowered its fiscal 2025 adjusted earnings guidance by 6% at the midpoint, reflecting both the third quarter reaching a targeted upside scenario and a more conservative outlook for the fourth quarter due to notable sales volatility experienced during Q3. The company’s EPS forecast for fiscal 2026 stands at $7.52, with InvestingPro noting that 9 analysts have revised their earnings downwards for the upcoming period.
The company also announced plans to increase its 2026 capital expenditure by 25%, representing greater investment in overall store experience, with more specific details expected during the fourth-quarter earnings call. Despite these increased investments, Target maintains a significant 5.3% dividend yield and has raised its dividend for 55 consecutive years.
Piper Sandler expressed ongoing concerns about Target’s weak transaction trends, which the retailer hopes to improve through a combination of design-led product authority and an elevated shopping experience across both physical stores and digital channels. Despite these challenges, Target trades at an attractive P/E ratio of 9.99 and remains profitable with a return on equity of 25%. Discover more insights and access Target’s comprehensive Pro Research Report, available exclusively with an InvestingPro subscription.
In other recent news, Target has reported mixed third-quarter results, with adjusted earnings per share of $1.78, surpassing the FactSet consensus estimate of $1.71. However, the company experienced a 2.7% decline in comparable sales and a 19% year-over-year profit decrease. Analysts have responded with varied assessments; KeyBanc reiterated its Sector Weight rating, while Telsey Advisory Group maintained a Market Perform rating with a $110 price target. Bernstein SocGen Group lowered its price target to $80, citing concerns over Target’s future capital expenditure plans. In contrast, Evercore ISI raised its price target to $100, noting the new CEO’s focus on revitalizing the business through design and technology initiatives. BMO Capital also adjusted its price target to $90, pointing to supply chain concerns. These developments come as Target navigates challenges in discretionary spending and attempts to accelerate its transformation efforts.
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