[GUEST ACCESS MODE: Data is scrambled or limited to provide examples. Make requests using your API key to unlock full data. Check https://lunarcrush.ai/auth for authentication information.]
Wall St Engine @wallstengine on x 74.5K followers
Created: 2025-07-21 10:19:47 UTC
Barclays Downgrades $TGT to Underweight from Equalweight, Maintains PT at $XXXXX
Analyst comments: "This is a current state underweight; we see value in the TGT model, but absent a bigger strategic shift, we believe sales will continue to underperform.
What else is changing? We published a deep dive recently on many of TGT's issues (Slipping Away: Is This Fixable?). Since then, the macro seems like it could get worse as inflation is just starting to accelerate. Also, while our analysis suggests comps have improved from Q1 (less bad, still negative), it has continued to underperform in both consumables and general merchandise. Further, our work suggests trends weakest among TGT's more frequent shoppers.
For margins, there are some benefits y/y in 2H but we believe that there is a ceiling medium-/long-term due to growing competitive issues. We expect the company to elaborate in Q2 on its key strategic initiatives to accelerate growth; it is unclear if that directly requires more investments.
Key risks to our UW include any acceleration in consumer discretionary demand which TGT would participate in (although we have other ways to play that), a management transition that could accelerate changes, potential gross margin upside from lapping supply issues last year along with continued shrink benefits supporting EPS, and an acceleration in competitor store closings which has helped TGT in the past.
No changes to our estimates; we remain below consensus for FY25 at $XXXX vs BBG consensus $XXXX and FY26 at $XXXX vs consensus $XXXX. Our PT stays at $XX and is based on 12x FY26 EPS, with downside to $XX (10x downside case EPS of $6.22, assuming -X% comps, GM down slightly while SG&A still grows LSD), and upside to $XXX (16x upside case of $9.52, with X% comps, EBIT margin of 5.2%, up XX bps y/y)."
Analyst: Seth Sigman
XXXXX engagements
Related Topics $barcl $tgt stocks consumer defensive