Target’s Stock (TGT) Expected to Underperform – Analyst Notes Weak Execution

Target Corporation (NYSE: TGT) is facing increased scrutiny after an analyst downgrade highlighted concerns about the company's execution and market share losses. The stock is currently hovering above $89, down -13.68% in the last month.

Wolfe Research initiated coverage of Target with an “Underperform” rating and an $80 price target. The firm's analysis suggests that Target will need to make significant reinvestments in labor, capital expenditures, and advertising to revitalize its same-store sales momentum. This assessment points to underlying operational challenges that could hinder Target's near-term performance, contributing to a cautious outlook for the stock.

The company's financial performance has been under pressure. In the first quarter of 2025, Target reported a 2.8% decline in sales, totaling $23.85 billion, falling short of Wall Street's estimate of $24.23 billion. Comparable store sales also dropped by 3.8%, with physical store sales experiencing a more substantial decline of 5.7%. While online sales saw a 4.7% increase, it wasn't enough to offset the overall decrease, signaling broader challenges in attracting and retaining customers.

Adding to the uncertainty, Target is navigating a leadership transition. Michael Fiddelke, the current Chief Operating Officer, is set to succeed Brian Cornell as CEO on February 1, 2026. This announcement in August 2025 led to an immediate market reaction, with Target's stock price dropping by more than 6%. The market's response indicates market unease regarding the company's strategic direction under new leadership and its ability to overcome existing operational hurdles.

Strategic policy shifts have further complicated Target's position. The company's decision to discontinue its diversity, equity, and inclusion (DEI) initiatives earlier in 2025, following controversy surrounding its Pride Month campaign in 2023, has drawn both support and criticism.

This move aligns Target with other major corporations facing conservative scrutiny, but it also exposes the company to potential legal risks and reputational challenges. The State of Florida has sued Target, alleging that the company misled shareholders about the risks associated with its DEI initiatives, adding another layer of complexity to the company's operating environment.

Moreover, external economic factors, such as tariffs on imports from Mexico, Canada, and China, have put additional pressure on Target's profitability. These tariffs are expected to affect prices, particularly for seasonal produce and non-essential categories, which constitute a significant portion of Target's sales. The company has projected a near-term profit squeeze due to these tariffs and cautious consumer spending, further dampening market sentiment.

Given these factors, analysts anticipate that Target's earnings may face a period of re-basing as the company invests in necessary improvements. The combination of weak execution, persistent market share losses, and external economic pressures paints a concerning picture for Target's near-term stock performance.

The confluence of analyst downgrades, leadership transitions, financial underperformance, strategic policy shifts, and legal challenges has created a complex and uncertain outlook for Target, which is likely to keep the stock under pressure in the coming months.