Bernstein Maintains Underperform Rating on Target (TGT), Cuts PT

On May 22, Bernstein kept an Underperform rating on Target Corp. (NYSE:TGT) and lowered the associated price target to $80 from $82.

The firm slashed the price target after TGT delivered an underwhelming Q1, with comparable sales of -3.8% coming in meaningfully below sell-side estimates of -1.9%. However, the firm pointed out that it was slightly better than market expectations.

The firm said that Target Corp. (NYSE:TGT) is struggling with shopper engagement in its stores, which added to its challenging Q1. Bernstein analysts opined that the declines observed in Q1 may continue for the retailer, especially if e-commerce margins continue to be diluted by the less profitable growth of same-day delivery services.

Bernstein has a cautious stance on TGT and pointed out that the company lowered and further widened its 2025 guidance range. It now expects a low-single-digit decline in sales and a GAAP EPS of $8.00 to $10.00.

The firm's stance is also based on the complicated balance between profit margins and sales growth. Target Corp. (NYSE:TGT) has historically been inclined to prioritize top-line growth over margins in difficult times, which could potentially worsen the gap in e-commerce margins.

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