JP Morgan Keeps Neutral Rating on Target (TGT), Lifts PT

On May 22, JPMorgan analyst Christopher Horvers raised the firm's price target on Target Corp. (NYSE:TGT) to $109 from $105 and kept a Neutral rating on the stock.

The update followed Target Corp.'s (NYSE:TGT) weaker-than-expected Q1 2025 earnings on May 21. While the analyst acknowledged TGT's position as a "relevant retailer" in the space, he opined that a better macro backdrop is essential to support goods purchasing.

Fiscal Q1 2025 sales for the company showed a comparable sales drop of 3.8%, at the lower end of the forecast. EPS also fell to $1.30 compared to $2.03 last year, including around a $0.50 shrink recapture. The analyst told investors in a research note that share loss and discretionary weakness led to the Q1 comps miss.

Target Corp.'s (NYSE:TGT) core merchandise margins were reported to have dropped by 125 basis points. The analyst pointed out that the company experienced a market share loss in several categories, including grocery and household essentials. These categories are a key part of the company's product mix and are essential for driving traffic.

Despite the ongoing challenges, management expects to relieve supply chain and merchandising pressures, suggesting that its $8.00 to $10.00 GAAP earnings per share outlook provides a better and clearer picture of its core profitability. It also reflects an operating margin of around 5%.

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Disclosure: None.