Analyst Lowers Target Q1 Forecast Amid Spending Slump, Rising Consumer Tariffs

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Analyst cuts Target's price target to $130, citing weak spending and higher costs.
2025 EPS forecast lowered to $8.80; Q1 comps expected to drop 1.5%.
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Telsey Advisory Group analyst Joseph Feldman reiterated the Outperform rating on Target Corporation TGT, lowering the price forecast from $145 to $130.

Target will report its first-quarter earnings on Wednesday, May 21. Analyst Feldman lowered first-quarter and full-year 2025 estimates for Target, citing weaker consumer spending, particularly in discretionary and general merchandise, along with rising costs tied to promotions, labor, tech investments, and potential tariff impacts.

While Placer.ai data showed declining traffic early in the quarter with some recovery later, likely from Easter timing and improved weather, Feldman noted that Target’s efforts in value offerings, loyalty programs, private label expansion, store upgrades, and brand partnerships (Apple Inc. AAPL, Walt Disney Company DIS, Levi Strauss & Co LEVI, Ulta Beauty, Inc. ULTA) could partially offset pressure.

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Feldman now projects total sales to fall 0.9% to $24.3 billion, with comparable sales to decline 1.5%, down from the prior forecast of 1.0% and below the FactSet consensus of a 1.2% drop.

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Feldman noted that Target sources roughly 50% of its cost of goods sold from within the U.S., while reducing its reliance on China from about 60% in 2017 to about 30% in 2024, with plans to bring that below 25% by 2026. Although the company hasn’t quantified the tariff impact, it plans to mitigate risks through sourcing diversification, vendor negotiations, and price increases while preserving balance sheet flexibility.

Reflecting softer consumer demand, a weaker product mix, and added cost pressures, especially tariffs, Feldman lowered his 2025 EPS estimate to $8.80 from $9.30 (vs. FactSet’s $8.62) and 2026 EPS to $9.55 from $10.14 (vs. FactSet’s $9.20).

Price Action: TGT shares are trading higher by 1.68% to $98.62 at last check on Friday.

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