Gold prices slip lower; consolidating after recent gains
Investing.com -- In a note this week, Telsey Advisory Group downgraded Target (NYSE:TGT) to Market Perform from Outperform, lowering its price target for the stock to $110 from $130 a share.
The firm pointed to macroeconomic headwinds, operational missteps, and limited visibility into near-term growth.
“Our confidence in the story was shaken by the weak 1Q25 performance and lowered (and widened) 2025 guidance,” the firm wrote.
Target’s first-quarter earnings fell short of expectations, with adjusted EPS of $1.30, well below Telsey’s estimate of $1.72 and the FactSet consensus of $1.61.
Comparable sales declined 3.8% versus Telsey’s forecast of a 1.5% drop. Operating margins compressed by 160 basis points to 3.7%.
The company lowered and widened its 2025 EPS guidance to $7.00–$9.00, down from the prior range of $8.80–$9.80.
Sales are now expected to decline in the low single digits, and comps are guided to fall in each of the next three quarters.
Gross margin faces “incremental pressure related to inventory clearance,” with inventories up 11.2% while sales declined 2.8%, said the firm. They add that tariffs also remain a near-term concern.
Telsey noted that Target’s competitors—Amazon, Costco (NASDAQ:COST), and Walmart—are gaining share in key categories, particularly among higher-income consumers. These rivals offer “wider assortments, sharper prices, and enhanced convenience.”
The firm highlights that Target is responding by “enhancing value, introducing newness in merchandising, managing shrink and costs, and leveraging productivity initiatives.”
However, Telsey expressed skepticism about the newly formed Enterprise Acceleration Office, writing, “we thought this was standard business practice already in place.”
Despite longer-term positives such as private label growth, digital marketplace expansion, and ad revenues from Roundel, Telsey sees limited near-term upside.