Target Under Pressure From Tariffs, Rising Competitive Gaps: Analysts

Target Corporation TGT shares are trading higher on Thursday. On Wednesday, Target registered first-quarter sales of $23.85 billion (down 2.8% year over year), which missed the Street view of $24.32 billion.

The retail giant lowered its FY2025 adjusted EPS guidance from $8.80–$9.80 to $7.00–$9.00. Following the results, analysts have made several adjustments to their ratings and price forecasts for the stock. Here are the key analysts’ takes on the stock:

BofA Securities analyst Robert F. Ohmes downgraded Target from Buy to Neutral, lowering the price forecast from $145 to $105.
Telsey Advisory Group analyst Joseph Feldman downgraded the stock from Outperform to Market Perform, decreasing the price forecast from $130 to $110.
JP Morgan analyst Christopher Horvers reiterated the Neutral rating on the company, raising the price forecast from $105 to $109.

Also Read: $1 Items, Made Outside China: Here’s How Target Has Been Tariff-Proofing Its Shelves, With Price Hikes ‘The Very Last Resort’

BofA Securities: Ohmes notes that while Target is experiencing overall softness in comparable sales, the company continues to perform well in areas like digital channels, seasonal categories, and brand partnerships, including the recent Kate Spade launch.

The analyst writes that merchandising efforts could help strengthen Target’s appeal and value perception over time. However, the stock is now notably lagging behind peers such as Walmart Inc. WMT.

Ohmes has lowered the FY26 adjusted EPS estimate to $6.95 from $9.10. For the second quarter, the analyst projects EPS of $1.50 and a 2% decline in comps.

Ongoing margin pressures are likely, and he flags increased uncertainty due to persistent top-line weakness, pressure from tariffs, and a delayed comp recovery. Softer sales are also expected to lead to more markdowns, which would further weigh on margins. Over the long term, Ohmes believes expansion in high-margin segments like marketplace and digital advertising could help improve margin stability.

Telsey Advisory Group: Feldman observes that competitors like Walmart are gaining ground in several of Target’s key product areas, holding or increasing share in 15 of 35 categories in Q1 FY25, particularly by appealing to higher-income shoppers through broader assortments, better pricing, and greater convenience.

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The analyst also expressed a cautious stance on the newly formed Enterprise Acceleration Office. As a result, he has reduced his 2025 EPS estimate to $7.71 from $8.80 and now expects comparable sales to decline 2.5%, versus a previous estimate of a 0.3% drop.

The revision in rating reflects the continued challenging macro environment, inconsistent operating execution, limited visibility on the progress of initiatives, and potential risks related to tariffs, the analyst noted.

JP Morgan: Per Horvers, Target continues to hold relevance as a retailer over the long term but emphasizes that a more supportive macroeconomic environment is needed to drive stronger goods demand, similar to the backdrop in Q4 FY24 when Target’s market share losses were at their lowest in over two years.

The current backdrop is complicated by tariffs (which could accelerate share to value players like Costco Wholesale Corporation COST, Walmart Inc., and Amazon.com, Inc. AMZN), the analyst notes.

Target has reiterated its tariff strategy, which includes negotiating with vendors, re-evaluating assortment, diversifying countries of production, adjusting ordering timing, and taking price as a last resort.

The analyst also points out that management reported 36% year-over-year growth in same-day delivery, driven by the Target Circle 360 program. The service now includes no markups for hundreds of partner retailers, which Horvers views as an effort to grow subscription revenue and better compete with offerings like Amazon Prime, Walmart+, and Instacart.

Price Action: TGT shares are trading higher by 2.31% to $95.22 at last check Thursday.

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