Target Corp. (NYSE:TGT) stock fell Friday after Bank of America restarted coverage with an Underperform call, signaling the retailer’s turnaround may take longer — and cost more — than bulls expect.
Bank of America Securities (BofA) reinstated coverage of Target on Friday with an Underperform rating and a $103 price forecast, implying roughly 10% downside from Thursday’s close of $114.79.
Analyst Christopher Nardone pegs his target at 14 times 2026 earnings per share forecast of $7.35 — about 4% below Wall Street consensus — citing a valuation that already reflects a recovery the business has yet to prove out.
Discretionary Drag Remains The Core Problem
Nardone’s bearish thesis centers on Target’s apparel and home segments, which together represent about 30% of sales remains “the biggest key to a potential turnaround.”
Off-price rivals TJX Companies Inc. (NYSE:TJX), Ross Stores Inc. (NASDAQ:ROST), and Burlington Stores Inc. (NYSE:BURL) are winning on assortment, while Walmart Inc. (NYSE:WMT) is winning on price.
Recovery Won’t Come Fast
BofA sees a planned $1 billion capex step-up in 2026 — bringing the total to $5 billion — adding cost pressure before it generates any sales lift.
Combined with inflationary selling, general and administrative items like labor and healthcare, the analyst argues an EPS recovery “will take time.” His base-case model assumes flat sales, comparable sales declining 1%, and gross margin expansion of 30 basis points.
Tax Refund Boost Is The Biggest Risk To The Bear Call
Nardone acknowledges tax refunds — projected to rise more than 25% this year — could drive a near-term inflection in discretionary spending. He calls it “the biggest risk to our more cautious call.”
Investors are also encouraged by early moves from new CEO Michael Fiddelke, raising hopes for further momentum — and potentially more valuation upside — even before tangible results materialize.
TGT Price Action: Target shares were down 1.52% at $113.04 at the time of publication on Friday, according to Benzinga Pro data.
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