Telsey cuts Target stock price target to $130, keeps Outperform rating

On Friday, Telsey Advisory Group adjusted its price target on Target Corporation (NYSE:TGT) shares to $130 from $145, while continuing to recommend the stock with an Outperform rating. The revision reflects concerns over softer consumer spending, particularly in discretionary and general merchandise categories, and additional costs related to promotions, labor and technology investments, and potential tariff impacts. According to InvestingPro data, 12 analysts have recently revised their earnings estimates downward for the upcoming period, though the company maintains a solid financial health score of "GOOD."

The firm’s analysis, incorporating insights from Placer.ai traffic data, noted a challenging start to the first quarter of 2025, with some sequential improvement as the quarter advanced. This improvement was attributed to the timing of Easter and more favorable weather conditions. Despite these headwinds, Telsey expects Target’s strategic focus on value, customer loyalty, and a series of initiatives, including private brands, store renovations, supply chain improvements, and digital enhancements, to provide some counterbalance to the negative trends.

Target’s efforts to enrich its product offerings through partnerships with renowned brands like Apple (NASDAQ:AAPL), Disney (NYSE:DIS), Levi’s (NYSE:LEVI), and Ulta Beauty (NASDAQ:ULTA) are anticipated to bolster outcomes. The stock has indeed taken a significant hit, with InvestingPro showing a 34.4% decline over the past six months. The stock currently trades at a P/E ratio of 10.9x, with a strong free cash flow yield of 10%. What’s particularly noteworthy is Target’s impressive 54-year streak of consecutive dividend increases, demonstrating remarkable resilience through various market cycles. Based on InvestingPro’s Fair Value analysis, the stock appears significantly undervalued at current levels.

In light of these factors, Telsey has opted to maintain its positive Outperform rating on Target stock. However, the firm has reduced the 12-month price target to $130, applying a lower P/E multiple of approximately 15 times, down from 16 times, to its new EPS estimate for 2025 of $8.80. For deeper insights into Target’s valuation and growth prospects, including access to 10+ additional ProTips and comprehensive financial metrics, explore the full analysis available on InvestingPro, where you’ll find an in-depth Pro Research Report covering what really matters about this prominent retail stock.

In other recent news, Target Corporation has been the focus of several analyst reports and market developments. Citi analysts have raised Target’s price target to $97 while maintaining a Neutral rating, citing a slow start to February sales due to adverse weather conditions. Their analysis projects first-quarter sales and earnings per share below market consensus, with a potential retraction of the company’s full-year 2025 EPS guidance anticipated. Meanwhile, Morgan Stanley (NYSE:MS) holds an Overweight rating with a $160 price target, noting that Target’s current valuation is not demanding compared to its peers, despite challenges in execution and long-term visibility.

CFRA has downgraded Target from a ’Buy’ to a ’Hold’ and slashed the price target to $100, reflecting concerns over economic challenges and tariff risks. The firm revised its earnings per share estimates for fiscal years 2026 and 2027, anticipating a need for Target to adjust its profit outlook. Additionally, President Trump is set to meet with Target and other major retailers to discuss the impact of tariffs, which have caused consumer anxiety over potential price increases.

A recent Piper Sandler survey highlighted a decline in Target’s popularity among upper-income teens, contrasting with Walmart (NYSE:WMT)’s increased share in this demographic. The survey results indicate a shift in shopping habits that could impact Target’s market positioning. These developments provide insights into the current challenges and strategic considerations facing Target Corporation.

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