Target stock price target cut to $147 by CFRA, retains buy rating

On Wednesday, CFRA analyst Arun Sundaram adjusted the price target for Target Corporation (NYSE:TGT) shares, bringing it down from $162.00 to $147.00. With the stock currently trading at $117.14 and analyst targets ranging from $100 to $165, Sundaram has maintained a Buy rating on the retail giant’s stock, which commands a market capitalization of $53.67 billion. The new price target is based on a 16 times multiple of the anticipated fiscal year 2026 (ending in January) earnings per share (EPS) of $9.16, which has been revised downwards from the previous estimate of $10.11. CFRA has also initiated its fiscal year 2027 EPS estimate at $10.08.

The selected multiple aligns with Target’s long-term average, but stands significantly lower when compared to the multiples of other major players in the retail sector, such as Walmart (NYSE:WMT) and Costco (NASDAQ:COST), which trade at 36 times and 57 times their earnings, respectively. Target currently trades at a P/E ratio of 13.6x, suggesting potential value opportunity. According to InvestingPro, which offers comprehensive valuation analysis among its 10+ exclusive insights for Target, the stock appears undervalued based on its proprietary Fair Value model. According to Sundaram, while Target’s peers have experienced considerable multiple expansion in recent years, Target’s multiples have seen a relative decline against its historical averages.

Sundaram believes that the current valuation gap offers an attractive entry point for investors looking at Target shares. He anticipates that, over time, Target’s multiples could also experience expansion, especially as the company continues to grow its digital advertising arm, Roundel, and its third-party marketplace, Target Plus. The company’s strong dividend history, having raised dividends for 54 consecutive years according to InvestingPro, adds another compelling reason for long-term investors to consider the stock. Furthermore, the analyst suggests that Target’s plan to open 300 new stores over the next decade could contribute to an increase in its stock multiples.

A crucial factor for the improvement of Target’s stock, as per Sundaram, will be the company’s ability to achieve operating margins of 6% to 7% in the coming years, a significant rise from the 5.2% margin reported in fiscal year 2025. The analyst’s comments reflect a belief in Target’s potential to enhance profitability and thereby offer a promising investment opportunity. With annual revenue of $106.57 billion and strong cash flows that adequately cover interest payments, Target maintains a solid financial foundation for future growth. Investors seeking deeper insights into Target’s valuation and growth prospects can access the comprehensive Pro Research Report available exclusively on InvestingPro.

In other recent news, Target Corporation’s financial outlook has seen multiple adjustments from various analyst firms. RBC Capital Markets has revised its price target for Target from $153 to $151, maintaining an Outperform rating. This change reflects the firm’s updated projections for Target’s net sales growth and earnings per share (EPS) through 2026. Meanwhile, BMO Capital Markets has kept its Market Perform rating and $120 price target, noting the mixed signals from Target’s 2025 analyst day and concerns over tariffs and comparable sales growth.

Truist Securities has adjusted Target’s price target from $134 to $124, citing a slow start to the first quarter and competitive pressures from rivals like Walmart. Bernstein also cut its price target to $124 from $142, maintaining a Market Perform rating, and expressed concerns about Target’s ability to grow sales and profitability simultaneously. Piper Sandler followed suit, reducing its price target to $124 from $132, while retaining a Neutral rating, and highlighting potential risks such as tariffs and consumer spending declines.

The collective adjustments from these analysts underscore the challenges Target faces in the current retail environment. Despite these challenges, Target’s commitment to improving customer engagement and operational metrics remains a focal point for the company. As Target navigates these hurdles, the varying analyst perspectives provide insights into the potential outcomes for the retailer’s financial performance in the coming years.

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