Target Corporation (TGT): A Bull Case Theory

We came across a bullish thesis on Target Corporation (TGT) on LongYield’s Substack. In this article, we will summarize the bulls’ thesis on TGT. Target Corporation (TGT)'s share was trading at $94.29 as of 23^rd May. TGT’s trailing and forward P/E were 10.36 and 11.96 respectively according to Yahoo Finance.

Target Corporation (NYSE: TGT) reported first-quarter 2025 results that reflect a difficult retail environment marked by a 2.8% decline in net sales to $23.8 billion and a 3.8% drop in comparable sales, with store sales down 5.7% and traffic declining 2.4%. While digital sales grew 4.7%, and same-day services surged, these gains were not enough to offset macroeconomic headwinds like inflation, tariff pressures, and cautious consumer spending. Adjusted EPS fell to $1.30 from $2.03, missing expectations, while gross margins contracted due to markdowns and digital fulfillment costs.

However, improved shrink helped offset some margin pressure. Despite near-term weakness, Target maintained strong capital deployment, repurchasing $251 million in shares and paying $510 million in dividends. The company lowered its full-year EPS guidance to $7.00–$9.00 and expects capital expenditure near the low end of $4–$5 billion. Target gained market share in 15 of 35 tracked categories, with strength in essentials, apparel, and seasonal goods, aided by standout campaigns like the Kate Spade collaboration. Its positioning on value and curated offerings kept it competitive with peers such as Walmart and Amazon.

Geopolitical and tariff risks remain a concern, but Target is aggressively diversifying sourcing and holding prices steady. Omnichannel investments continue to pay off, with stores fulfilling 96% of sales and fulfillment speeds improving. Inventory was elevated but is expected to normalize by year-end. Though Q1 disappointed and guidance was cut, Target’s digital momentum, cost control, and long-term strategy offer a foundation for recovery and long-term investor appeal.

Previously, we have covered Target Corporation (TGT) in April 2025 wherein we summarized a bearish thesis by maparo on wallstreetbets subreddit page. The author highlighted that the company faced multiple challenges, including declining consumer spending, weakening foot traffic, and a stagnant financial outlook with slipping sales and earnings. Critics argued that Target’s pricing and brand positioning had eroded, leaving it vulnerable to competition from Walmart, Amazon, and Costco, while looming tariff pressures threatened to further squeeze margins. Overall, the analysis warned of a structural decline and recommended bearish trades due to the risk of further stock price weakness. Since our last coverage, the stock is up 2.32%.

Target Corporation (TGT) is not on our list of the 30 Most Popular Stocks Among Hedge Funds. As per our database, 62 hedge fund portfolios held TGT at the end of the first quarter which was 56 in the previous quarter. While we acknowledge the risk and potential of TGT as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than TGT but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

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Disclosure: None. This article was originally published at Insider Monkey.