Jefferies lowers Target stock price target to $115 from $120, maintains Buy rating

Target (TGT) reported mixed Q2 2025 results, exceeding adjusted EPS and revenue forecasts but facing declines in comparable sales and gross margins. This prompted varied analyst responses; Jefferies lowered its price target to $115 while maintaining a Buy rating, citing strong digital growth and cost control despite soft comparable sales, whereas Truist and BofA further reduced their targets, highlighting long-term sales and margin risks, and slowing digital performance. Amidst these operational challenges, Target also announced its COO will assume the CEO role, signaling strategic shifts as the company navigates a complex retail environment.

Analysis

Target Corporation (TGT) presented a mixed financial picture in its second-quarter 2025 results, narrowly beating forecasts with an adjusted EPS of $2.05 and revenue of $25.21 billion, which was 1.24% above expectations. However, these positive headline figures were overshadowed by underlying weakness, specifically a decline in comparable sales and a dip in gross margins. This has created a significant divergence in analyst sentiment. Jefferies, while reducing its price target to $115, maintained a 'Buy' rating, highlighting strong digital growth, disciplined cost control, and improved shrink as positive margin drivers. Conversely, BofA Securities reiterated an 'Underperform' rating with a $93 target, citing increasing long-term sales and margin risks, slowing digital sales growth, and a competitive lag behind Walmart. Truist Securities also lowered its target to $102 on a 'Hold' rating, partly due to the announced leadership transition which will see the current COO become the next CEO. Amid these pressures, management has reiterated its full-year guidance and signaled expectations for easier comparable sales comparisons in the third quarter, framing a cautious but potentially stabilizing outlook for a stock currently trading 41% below its 52-week high.

Key Decisions for Investors

• Investors should weigh the conflicting analyst views, balancing the bullish case on cost controls and reiterated guidance against the bearish outlook on declining comparable sales and competitive digital pressure from peers like Walmart.
• The upcoming third-quarter results will be a critical inflection point, as investors should watch to see if the company delivers on management's expectation for easier comparable sales comparisons.
• The appointment of the COO to CEO is a significant development; it is prudent to monitor for any new strategic initiatives aimed at addressing the long-term sales and margin risks highlighted by more cautious analysts.
• While the stock's position 41% below its 52-week high may suggest a value opportunity, this must be assessed against the tangible risks of market share loss in digital channels and ongoing tariff-related pressures.