Retail giants are navigating a rapidly evolving landscape where digital initiatives and competitive pricing strategies are critical for capturing consumer interest. As shoppers increasingly turn to online platforms and demand value-driven options from their favorite brands, companies like Target Corporation (NYSE:TGT) face the dual challenge of enhancing their digital presence while managing competition from industry heavyweights.
BofA Securities analyst Robert F. Ohmes maintained an Underperform rating for Target on Friday, along with a price forecast of $93.
Bearish Stance: The analyst cites weak digital growth, online advertising and marketplace as headwinds. Also, pricing and merchandising challenges and intensifying competition from Walmart and Amazon remain the key negatives.
Recently, BofA hosted a store Tour in Nashville, Tennessee, and observed that the TGT Circle Week (Oct. 5–11) got off to a strong start.
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The store featured 50% off Halloween decorations and 40% off costumes, with typical in-store and online sales lifts of 10%–20%, writes the analyst.
Apparel & Grocery: Ohmes notes that the store, remodeled last year, has driven strong sales growth from its expanded apparel and grocery sections.
The analyst writes that the apparel segment contributed ~40% and food ~30% of the lift.
Key apparel highlights include the Champion display at the front and strong performance from Wild Fable, notes the analyst.
Beauty: Target will repurpose the freed 1,000 sq. ft. per store after Ulta partnership concludes in August 2026, notes the analyst.
Ohmes writes that the store saw rising traffic in beauty and wellness, and Target is engaging top brands to expand in this category. However, Food and beverage sales are slightly affected by inflation, according to the analyst.
Ohmes notes that Target is successfully managing tariffs through its global sourcing network, keeping toy inventories stable.
General Merchandise: Books, $5 holiday gadgets, and fall seasonal items are performing well, while limited-run exclusives like Stranger Things drive demand, writes the analyst.
Investors can gain exposure to the stock via The Advisors Inner Circle Fund Cambiar Aggressive Value ETF (NYSE:CAMX) and Northern Lights Fund Trust IV Monarch Dividend Plus Index ETF (BATS:MDPL).
TGT Price Action: Target shares are down 3.05% at $86.38 at the time of publication on Friday, sitting just 0.4% above its 52-week low. It's also trading 8.9% below its 50-day moving average.
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