Target Corp.: Early progress but set up gets tougher from here

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Target Corp.: Early progress but set up gets tougher from here

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Target Corp.

Early progress but set up gets tougher

from here

Reiterate Rating: UNDERPERFORM | PO: 110.00 USD | Price: 122.33 USD

Maintain Underperform; turnarounds take time 20 May 2026

We maintain our Underperform rating on the stock given the risk that decelerating sales Equity

trends could compress the multiple and limit incremental upside to today’s guidance

raise. TGT raised F26 guidance near the high end of $7.50-$8.50 range reflecting the 1Q

Key Changesbeat, leaving its 2Q-4Q outlook relatively unchanged. We raise our F26E/F27E EPS

forecasts by 4%/5% to $8.20/$8.53 as we flow through the 1Q beat. TGT faces tougher (US$) Previous Current

comparisons ahead as it starts to lap the Nintendo Switch 2 launch in early June and is 2027E Rev (m) 106,003.1 107,983.9

impacted by the tax refund tailwind fading. See here for more 1Q takes. 2028E Rev (m) 107,636.9 109,930.9

2029E Rev (m) 109,278.2 112,156.3

GM drivers in 2Q should be similar to 1Q 2027E EPS 7.90 8.20

Directionally speaking, the drivers of 1Q margin should be similar to 2Q. This includes 2028E EPS 8.14 8.53

continued opportunity on better full price sell through (2Q25 was impacted by a ~$0.50 2029E EPS 8.56 9.05

headwind from order cancellations), ongoing benefits from advertising and supply chain 2027E DPS 4.56 4.55

efficiencies, and another quarter of shrink headwind due to timing of accruals. Our

expectation is SG&A growth moderates from +7% in 1Q, driven by timing of store Christopher Nardone

openings and remodels, store/DC labor flexing lower with sales (we model comp +1.5% Research Analyst BofAS

in 2Q and +0.5% in 2H), and 1Q potentially representing the greatest impact from +1 646 743 2016