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Investing.com -- Barclays downgraded Target (NYSE:TGT) to Underweight from Equal Weight on Monday, maintaining a $91 price target on the stock.
The bank warned that the U.S. retailer could continue to struggle with sales and competitive pressures without a significant strategic overhaul.
In a sweeping review of the food and staples retail sector, Barclays (LON:BARC) said, “We still believe there is a place for this concept, but absent a bigger strategic shift, sales may continue to underperform.”
Target’s recent performance has lagged peers in both consumables and general merchandise. According to Barclays, “our analysis suggests comps have improved from Q1 (less bad, still negative),” but sales trends appear “weakest among TGT’s more frequent shoppers.”
Barclays said the retailer faces medium- to long-term margin pressure due to “growing competitive issues,” even as year-over-year comparisons may bring some relief in the second half.
The firm added that it expects more detail on growth initiatives during Target’s second-quarter update, though it is “unclear if that directly requires more investments.”
While Barclays acknowledged several upside risks, including a rebound in discretionary spending, margin improvements, or accelerated competitor closures, the bank remains below consensus on earnings, projecting $7.31 for FY25 and $7.58 for FY26.
Overall, Barclays sees better opportunities elsewhere. “We favor players with sustainable price, convenience or assortment advantages,” the analysts wrote, adding that strong year-to-date performance across the sector “has left few meaningful disconnects.”