Bank of America Securities analyst Robert Ohmes has downgraded Target’s (TGT) rating to Sell from Hold and slashed the price target to $93 (9.7% downside) from $105 ahead of its Q2 results. The five-star analyst cited growing concerns over the retailer’s long-term sales, profitability outlook, and competitive scenario. TGT stock was down about 2% on Friday.
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The revised price target is based on a 12x multiple of the analyst’s updated Fiscal 2027 adjusted EPS estimate of $7.75, down from a prior forecast of $8.00 and a 13x multiple.
Analyst Highlights the Key Risks
The downgrade reflects several key risks that could weigh on Target’s long-term performance. Ohmes noted that the company is grappling with slowing digital sales growth, which may limit its ability to adapt to shifting consumer behaviors.
Further, he said Target lacks scale in digital advertising and third-party marketplace operations, areas where rivals like Amazon (AMZN) and Walmart (WMT) have already built momentum.
At the same time, tariff-related costs, pricing pressures, and merchandising challenges could continue to pose margin threats. He believes Target is more exposed to import-related costs than Walmart.
Since about half of Target’s cost of goods sold comes from imports, compared to just a third for Walmart, it would need to raise prices by around 8% on average to fully offset the impact of tariffs. In contrast, Walmart would only need to raise prices by about 4% to 5%, giving it a pricing advantage in a tariff-heavy environment.
TGT to Report Q2 Earnings Next Week
Target will report its Q2 earnings on August 20, and BofA now expects earnings of $1.92, up from $1.50, thanks to lower theft-related losses.
Currently, Wall Street analysts expect Target to report earnings of $2.02 in Q2 2025, compared to $2.57 in the prior-year quarter. However, the company’s revenue for Q2 is expected to decline by about 2% year-over-year to $24.94 billion.
Is Target a Buy, Hold, or Sell?
Turning to Wall Street, Target stock has a Hold consensus rating based on 11 Buys, 17 Holds, and four Sells assigned in the last three months. At $103.40, the average TGT stock price target implies a 1% upside potential.
