Telsey maintains Target stock rating at Market Perform amid soft outlook

Investing.com - Telsey Advisory Group has reiterated its Market Perform rating and $110.00 price target on Target (NYSE:TGT) ahead of the retailer’s third-quarter 2025 results. Currently trading at $90.62, Target shares sit near their 52-week low of $85.36 and appear undervalued according to InvestingPro analysis, despite having fallen 30% year-to-date.

The research firm expects soft performance in the third quarter, projecting a comparable sales decline of 1.5% and earnings per share falling 5% to $1.76, slightly above the FactSet consensus of $1.72. This aligns with broader revenue trends, as InvestingPro data shows Target’s revenue declined 1.55% over the last twelve months, with analysts forecasting a 2% drop for fiscal year 2026.

Telsey attributes the expected weakness to cautious consumer spending on discretionary categories, increased promotional and technology investment costs, and ongoing headwinds from higher tariffs. These pressures are partially offset by easier year-over-year comparisons related to elevated digital fulfillment and supply chain costs from 2024. Despite these challenges, Target maintains a 5.03% dividend yield and trades at an attractive P/E ratio of 10.6.

The firm’s analysis of Placer.ai traffic data indicates a consistent negative trend throughout the third quarter, though traffic improved sequentially toward the quarter’s end. Telsey expressed concern that Target continues to lose customers and market share to competitors including Amazon (NASDAQ:AMZN), Costco (NASDAQ:COST), and Walmart (NYSE:WMT). With a market cap of $41.18 billion, Target remains a prominent player in the Consumer Staples Distribution & Retail industry, though its financial health score is rated as "Fair" by InvestingPro.

Target’s new CEO-elect Michael Fiddelke is focusing on reestablishing merchandising authority, elevating the shopping experience, and leveraging technology for transformation, which Telsey views as appropriate steps to revive the business, though results may require patience. Investors should note that Target has maintained dividend payments for 55 consecutive years, with Target’s next earnings report scheduled for November 19. For deeper insights into Target’s valuation and comprehensive analysis, check out the Pro Research Report available exclusively on InvestingPro.

In other recent news, Target Corporation has made several strategic moves and faced notable evaluations from analysts. Target introduced AI-powered features to enhance holiday shopping, including a conversational Gift Finder and a List Scanner, aimed at personalizing and simplifying the shopping experience. UBS reiterated its Buy rating on Target stock, maintaining a price target of $130, despite acknowledging past performance challenges. Meanwhile, TD Cowen lowered its price target for Target to $105, citing the company’s current valuation and sales expectations as factors for potential upside with in-line results. Guggenheim also maintained a Buy rating with a $115 price target, highlighting new CEO Michael Fiddelke’s efforts to streamline operations through significant job cuts. Conversely, Truist Securities reduced its price target to $83, attributing the revision to operational missteps in merchandising and marketing that have affected consumer perceptions. These developments reflect a mix of optimism and caution among analysts regarding Target’s future performance.

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