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On Wednesday, BMO Capital Markets adjusted its outlook on Target Corporation (NYSE:TGT), reducing the retailer’s price target from $100.00 to $95.00, while retaining a Market Perform rating on the stock. The adjustment comes amid concerns over Target’s declining comparable store sales and market share losses at the beginning of 2025, as well as an inventory misalignment with sales. According to InvestingPro data, Target’s stock has fallen nearly 22% over the past six months, though its current P/E ratio of 10.5x suggests attractive valuation levels.
The commentary from BMO Capital Markets highlighted that Target’s management has issued guidance that aligns with market expectations, despite the initial setbacks. This guidance accounts for tariffs, which Target anticipates it will be able to offset substantially. BMO Capital’s analysis suggests that pricing strategies may play a key role in this mitigation effort. Notably, InvestingPro analysis shows Target has maintained dividend payments for 55 consecutive years, demonstrating strong financial resilience through various market cycles.
The firm also pointed out potential near-term challenges for Target, specifically regarding gross margin percentages in the second half of the year due to a difficult inventory planning environment. This could pose continued risks to profitability in the near term.
Looking further ahead, BMO Capital Markets sees additional long-term risks for Target, particularly in the necessity for deeper investments in its supply chain infrastructure. The firm’s assessment indicates that to maintain competitiveness and efficiency, Target may need to allocate more resources to enhance its supply chain capabilities.
The price target reduction reflects a cautious stance on Target’s near-term financial performance and operational challenges. The Market Perform rating suggests that BMO Capital views Target’s stock as likely to perform in line with the broader market expectations in the foreseeable future.
In other recent news, Target Corporation’s financial performance has been under scrutiny following its first-quarter results, leading to several analyst adjustments. Telsey Advisory Group downgraded Target’s stock from ’Outperform’ to ’Market Perform’ due to disappointing earnings, which reported an adjusted EPS of $1.30, missing estimates, and a 3.8% drop in comparable sales. Similarly, BofA Securities downgraded Target’s rating to Neutral, citing concerns over persistent sales weakness and increased uncertainty in the company’s top-line performance. TD Cowen also adjusted its price target to $105, maintaining a Hold rating, as it anticipates continued near-term challenges for the retailer.
Jefferies lowered its price target to $120 while maintaining a Buy rating, noting the company’s strong digital sales but highlighting issues with weak in-store traffic and markdown pressures. Truist Securities, on the other hand, raised its price target to $90, maintaining a Hold rating, and pointed out challenges from inventory management and external pressures from competitors. Analysts have expressed concerns over Target’s operational performance, with some focusing on the impact of tariffs and the company’s strategic responses. Despite some positive developments, such as digital growth and improvements in shrinkage, analysts remain cautious about Target’s near-term prospects. These recent developments underscore the mixed outlook for Target as it navigates a challenging economic landscape.
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