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Investing.com - Truist Securities has lowered its price target on Target (NYSE:TGT), a $44.7 billion retail giant currently trading at an attractive P/E ratio of 10.7, to $102.00 from $107.00 while maintaining a Hold rating on the stock. According to InvestingPro analysis, the stock appears undervalued at current levels.
The price target reduction follows Target’s second-quarter results, which Truist noted were in line with their revised estimates, but the firm’s primary focus was on the company’s recent CEO change.
Truist expressed concerns about the promotion of Mr. Fiddelke from COO to CEO, suggesting that as a long-time Target veteran, he might be less likely to make the "substantial investments/changes" the firm believes are necessary to improve Target’s long-term relevance.
The securities firm noted that Target has "lost competitive relevance" during Fiddelke’s tenure in the C-suite, raising questions about his ability to implement needed changes in his new role as CEO.
Truist acknowledged that cleaner inventories and benefits from reduced shrink should help Target’s margins in the second half of the year, but maintained that the "amount of investment" required makes the company’s medium to long-term earnings power "questionable."
In other recent news, Target Corporation reported its earnings for the second quarter of 2025, with an adjusted earnings per share (EPS) of $2.05. This figure slightly exceeded the analysts’ forecast of $2.04. The company’s revenue for the quarter reached $25.21 billion, surpassing expectations by 1.24%. Despite these positive earnings results, the company faced challenges with a decline in comparable sales and a dip in gross margins. BofA Securities has maintained its Underperform rating on Target, with a price target of $93.00. The firm highlighted concerns over Target’s slowing digital sales growth and its lack of scale in digital advertising and third-party marketplace. BofA noted that Target is trailing behind competitors like Walmart (NYSE:WMT) in digital sales trends. These developments have contributed to a cautious outlook among investors.
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