Bernstein lowered the firm’s price target on Target to $97 from $124 and keeps a Market Perform rating on the shares. The firm assumes 145% Chinese tariffs and “Liberation Day” tariffs on other markets. Bernstein expects retailers to work with suppliers to lower product costs by 20%-25% by lowering prices, changing product spec, and/or switching suppliers. It then expects retailers to pass on the remaining to consumers, which could drive average prices up by low single digits to high teens percentage and negatively impact volume and traffic. Such tariff impacts could translate into double digits EPS downside, with Dollar Tree (DLTR) and Target (TGT) being the most impacted.
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