Key Takeaways:
Target shares rose 3.4% after Wolfe Research upgraded the retailer to Outperform, citing accelerating store improvements and stronger customer traffic.
"Summer store resets are accelerating, and we've been impressed by what we've seen so far," Spencer Hanus, analyst at Wolfe Research, said. "Target is becoming a destination once again."
Hanus raised his rating to Outperform from Peer Perform with a $162 price target, implying about 21% upside from the stock's $133.32 close. He lifted his fiscal 2026 earnings-per-share estimate to $8.48, above the $8.37 consensus, and expects $9.52 for 2027, well ahead of the $8.95 average analyst estimate. The upgrade follows Target's fiscal first-quarter results, which showed same-store sales rising 5.6% — the first positive comps in five quarters — driven by 4.4% traffic growth and a 24.6% jump in high-margin non-merchandise revenue from its Roundel advertising and Circle 360 businesses.
Target's new management team under Chief Executive Officer Michael Fiddelke has focused on fixing out-of-stock issues, refreshing merchandise, and forging new partnerships, including a multi-season collaboration with Abercrombie & Fitch's Hollister brand that launched with nearly 60 products. Over the past four weeks, new-customer growth has accelerated, Hanus noted, adding that "Target's stores were in much better condition, so the likelihood of repeat visits is higher."
The upgrade adds to a growing consensus that Target's turnaround is gaining traction after years of skepticism. Analysts from Bernstein and Telsey Advisory Group also upgraded the shares in March following Fiddelke's inaugural investor day. The average analyst price target has risen to $135 from $100 at the start of the year. The stock has rallied about 36% year to date but remains roughly 50% below its pandemic-era high, leaving room for further gains if execution holds. Investors will watch the company's fiscal second-quarter results, due in August, for evidence that same-store sales momentum is continuing.
This article is for informational purposes only and does not constitute investment advice.
