Target Corp (NYSE:TGT) stock rose 4.88% (As on March 3, 11:32:21 AM UTC-4, Source: Google Finance) after BofA reinstated coverage of the company with an Underperform rating and $103 price target. The firm thinks consensus expectations for consistent positive comparable growth beyond fiscal Q1, which should be aided by higher tax refunds, may prove “aggressive” and thinks an EPS recovery will take time.
Meanwhile, Target’s new CEO Michael Fiddelke pledged to restore annual sales growth, betting on store expansion and faster deliveries to revive the struggling retailer. Target is focusing on revamped merchandising, sharper pricing and store-experience upgrades to coax shoppers back. The company had pledged about $1 billion more in 2026 for new stores, remodels and improving same-day deliveries, as well as store order pick-ups.
Moreover, Target’s comparable sales for the fourth quarter were propped up by resilient demand in beauty and food-and-beverage. The retailer has been leaning into everyday essentials, expanding its beauty offerings and deploying sharper promotions to draw in value-focused shoppers despite persistent softness in discretionary spending. Sales in beauty, a bright spot over the last several quarters, rose 1.1% from a year earlier, while sales of food and beverages were 1.8% higher in the quarter. The company has focused on controlling costs by cutting 1,800 corporate roles in October last year, two months after naming Fiddelke as Brian Cornell’s successor. It also plans to invest more in in-store labor, in a bid to win shoppers back, who have strayed away from the unorganized shelves and long checkout lines. Its margins have also been pressured by U.S. import tariffs, at a time when the retailer is attempting to keep prices affordable for budget-minded customers. It reported quarterly operating income margin of 4.5% compared with 4.7% in 2024. Target’s total comparable sales – from online channels and stores open for at least 13 months – declined 2.5% for the three months ended January 31, steeper than analysts’ average estimate of a 2.4% drop. Adjusted earnings came in at $2.44 per share, handily beating estimates of $2.16 per share.
Additionally, the Company did not repurchase any shares in the fourth quarter. As of the end of the fourth quarter, the Company had approximately $8.3 billion of remaining capacity under the repurchase program approved by Target’s Board of Directors in August 2021.
The company expects 2026 net sales growth of 2%, its first rise following three years of declines, compared with analysts’ expectations of a rise of 1.76%, according to data compiled by LSEG. Target projected full-year earnings per share in the range of $7.50 to $8.50, largely above estimates of $7.67 per share.