Last Update 31 Oct 25

Fair value Decreased 0.15%

Target’s analyst price target saw a modest decrease, slipping from $101.52 to $101.36. Analysts cited ongoing industry headwinds and the need for significant investment to address margin and revenue challenges.

Analyst Commentary

Recent Street research reveals a divided outlook on Target’s future prospects, with some analysts seeing potential upside while others remain cautious given the company’s current trajectory. This split perspective is influenced by Target's operational execution, valuation trends, and external market challenges.

Bullish Takeaways

Bullish analysts have increased their price targets, highlighting improvements in digital and alternative revenue streams as well as cost control initiatives that are supporting margins.
Recent updates to company models following earnings releases suggest there are encouraging signs, such as flattening margins and management transitions, that could prove supportive for long-term performance.
Target’s trading valuation, notably below historical averages and many sector peers on a forward-looking basis, is seen as an attractive entry point for some, particularly if operational trends stabilize.
Upcoming leadership changes and renewed focus on core challenges like supply chain and merchandising may set the stage for a reinvestment cycle and better execution.

Bearish Takeaways

Bearish analysts continue to trim price targets, citing persistent sales declines, soft comparable sales, and a deteriorating consumer perception stemming from execution missteps.
External headwinds, including reduced Supplemental Nutrition Assistance Program benefits and the risk of a government shutdown, are directly impacting Target’s core grocery and staples business, making short-term recovery challenging.
Concerns persist over whether the leadership transition will catalyze substantive change, with some viewing the move as maintaining the status quo rather than inspiring needed reinvestment.
Multiple firms view Target as "poorly positioned" relative to key competitors, especially after years of underinvestment in technology, price, and store experience, raising questions about the sustainability of future earnings and margin improvement.

What's in the News

Target's planned layoffs of 1,000 corporate employees experienced a technical Zoom glitch during a companywide meeting. This created confusion and further highlighted communication issues during the company's largest restructuring in nearly a decade (Bloomberg).
A recent staff survey found that around 40% of Target employees lack confidence in the company’s future, with scores even lower among headquarters staff. This underscores ongoing concerns as Target searches for a new CEO after 10 quarters of stagnant or declining sales (Wall Street Journal).
Walmart has expanded its 10% employee discount to almost all groceries, intensifying competition for employee benefits. Target currently offers a 20% discount on produce and select brands, and 10% off most other goods, starting on the first day of employment (Wall Street Journal).

Valuation Changes

Consensus Analyst Price Target has declined slightly, dropping from $101.52 to $101.36.
Discount Rate edged down marginally, moving from 7.60% to 7.58%.
Revenue Growth estimates have risen, increasing from 1.79% to 1.91%.
Net Profit Margin projections dipped slightly, decreasing from 3.45% to 3.36%.
Future P/E ratio has increased modestly, going from 14.59x to 14.86x.

Weak discretionary spending and slow adaptation to younger consumer preferences could limit Target's sales and reduce long-term topline growth prospects.
Operational inefficiencies, competitive pressures, and regulatory headwinds may increase costs and compress margins, challenging sustainable earnings growth.
Strategic investments in technology, private label brands, digital platforms, and supply chain agility position Target to improve margins, capture market share, and foster sustained earnings growth.

Catalysts

About Target

Operates as a general merchandise retailer in the United States.What are the underlying business or industry changes driving this perspective?

Investors could be overly optimistic about Target's ability to capture higher spending from younger demographic cohorts (Millennials and Gen Z); however, persistent macro pressures, evolving consumer preferences, and weak discretionary spending suggest household wallet share gains and comparable sales growth may not materialize as strongly as anticipated, risking long-term topline growth projections. (Likely to impact revenue.)
Despite ongoing investments in digital and supply chain modernization, Target continues to lag best-in-class competitors in both operational efficiency and online execution, leaving its net margins exposed if omnichannel retailing and rapid delivery demands outpace the company's actual capability improvements. (Likely to impact net margins and EBIT.)
The market may be underestimating the impact of further e-commerce disintermediation and direct-to-consumer models, which continue to drive structural declines in in-store traffic and challenge the economics of Target's large physical footprint, potentially constraining revenue growth and increasing fixed cost deleverage over the long term. (Likely to impact revenue and profitability.)
Expectations of rapid technology-driven personalization and improved loyalty economics (via Target Circle and data analytics) may be too aggressive, given ongoing internal process bottlenecks, slow digital integration, and increasing channel fragmentation, all of which could limit gains in customer retention, frequency, and basket size. (Likely to impact revenue and SG&A.)
Accelerating regulatory, environmental, and labor cost pressures, combined with persistently intense industry price competition (from Walmart, Amazon, and discount retailers), risk structurally higher SG&A expenses and margin compression, challenging Target's ability to deliver earnings growth in line with market expectations. (Likely to impact net margins and EPS.)

Target Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming Target's revenue will grow by 1.4% annually over the next 3 years.
Analysts assume that profit margins will shrink from 4.0% today to 3.4% in 3 years time.
Analysts expect earnings to reach $3.7 billion (and earnings per share of $8.36) by about August 2028, down from $4.2 billion today. However, there is a considerable amount of disagreement amongst the analysts with the most bullish expecting $4.2 billion in earnings, and the most bearish expecting $3.2 billion.
In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 14.9x on those 2028 earnings, up from 11.4x today. This future PE is lower than the current PE for the US Consumer Retailing industry at 21.6x.
Analysts expect the number of shares outstanding to decline by 1.37% per year for the next 3 years.
To value all of this in today's terms, we will use a discount rate of 7.41%, as per the Simply Wall St company report.

Target Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

The company is actively investing in technology (including rapid adoption of AI and digital enhancements), process improvements, and store remodels, which could drive increased operational efficiency, better customer experience, and improved margins and earnings in the long term.
Strong performance in Target's owned brand portfolio (now exceeding $31 billion in annual sales), along with exclusive partnerships and new product launches, positions the company to grow market share and improve gross margins through higher private label penetration and differentiated offerings, supporting revenue and profitability.
The growing and profitable first-party digital business, along with double-digit growth in Target's Roundel (retail media) and Target Plus (marketplace) segments, suggest successful omnichannel integration and new high-margin revenue streams, countering concerns about declining in-store traffic and supporting earnings growth.
Target's ability to rapidly adapt its merchandising and supply chain strategies amidst external shocks like tariffs (through diversification, vendor negotiations, and inventory adjustments) demonstrates organizational agility, which should help protect both top-line revenue and net profit margins in volatile environments.
Continued expansion and successful sales growth in key categories-especially Hardlines/FUN 101, new exclusive collaborations (e.g., Champion for Target), and resilient performance in frequency categories like food and beverage-indicate that Target is maintaining or gaining market share, supporting the potential for long-term revenue and earnings growth despite near-term headwinds.

Valuation

How have all the factors above been brought together to estimate a fair value?

The analysts have a consensus price target of $103.688 for Target based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $135.0, and the most bearish reporting a price target of just $82.0.
In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $110.5 billion, earnings will come to $3.7 billion, and it would be trading on a PE ratio of 14.9x, assuming you use a discount rate of 7.4%.
Given the current share price of $105.36, the analyst price target of $103.69 is 1.6% lower. The relatively low difference between the current share price and the analyst consensus price target indicates that they believe on average, the company is fairly priced.
We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

How well do narratives help inform your perspective?

Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

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