Target stock neutral at Mizuho as Ulta shop-in-shop deal ends

Investing.com - Target (NYSE:TGT), the $47 billion retail giant trading at an attractive P/E of 11.27, maintained a Neutral rating and $88.00 price target at Mizuho as the retailer announced the end of its partnership with Ulta Beauty. According to InvestingPro data, Target has maintained dividend payments for 55 consecutive years, showcasing its financial resilience.

Target and Ulta Beauty (NASDAQ:ULTA) are officially winding down their multi-year shop-in-shop relationship, which included co-located selling space at more than 600 Target stores, according to Mizuho analyst David Belinger.

The store spaces are expected to be reset in late 2026, with both companies describing the decision as "mutual" in their announcement.

The strategic shift follows Target’s beauty category performance turning slightly negative in Q1, breaking a trend of longstanding growth in what represents a sizable $13 billion-plus run-rate business accounting for more than 10% of Target’s total merchandise revenues.

Mizuho views the dissolution of the Ulta partnership as a negative development, attributing it to "messy in-store operations" at Target and "ongoing issues with inventory shrink, inadequate labor hours," creating another challenge for Target’s next CEO to address. Despite these challenges, InvestingPro analysis suggests Target is currently undervalued, with additional insights available in the comprehensive Pro Research Report, which covers over 1,400 US stocks.

In other recent news, Ulta Beauty announced that it will not renew its shop-in-shop partnership with Target when their current agreement concludes in August 2026. The partnership, which began in 2021, will continue to operate in Target stores and on Target.com until its expiration. Meanwhile, Target has been the focus of several analyst evaluations. Telsey Advisory Group maintained its Market Perform rating for Target, with a price target of $100, citing a projected decline in comparable sales and earnings per share for the fiscal year 2025. TD Cowen also adjusted its outlook, lowering its price target to $100, expecting weaker second-quarter earnings per share compared to consensus estimates. In contrast, Truist Securities raised its price target for Target to $107, attributing the increase to better-than-expected second-quarter sales performance. Bernstein maintained an Underperform rating on Target, highlighting potential turnaround challenges but suggesting a possible inflection point if CEO Brian Cornell steps down. These developments reflect varied perspectives on Target’s future performance amidst changes in partnerships and market conditions.

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