Shares of Target Corporation TGT haven’t been able to catch a breath lately. Over the past three months, the stock has slid 25.1%, leaving investors wondering whether the big-box retailer is losing its edge or caught in a broader wave of retail weakness. From shifting consumer habits to rising competition and margin pressures, several forces appear to be weighing on sentiment.
However, for long-term investors, steep declines like this often raise a question: Is the worst already priced in? With Target still commanding a strong brand, a massive store footprint and ongoing digital initiatives, the case isn’t so black and white. Let’s take a closer look at what’s driving the recent drop and whether TGT should be part of your portfolio at today’s levels.
TGT Stock Performance
As a well-established player in the retail sector, Target is known for its strong market presence and customer-centric approach. However, broader market dynamics, such as tariff concerns and company-specific challenges, might have hurt the stock. Closing at $96.40 last Friday, TGT stock is trading 42.4% below its 52-week high of $167.40 touched last year in August.
Target has underperformed the Retail–Discount Stores industry and the S&P 500 Index, which recorded respective declines of 4.4% and 8.1% during the three months. The stock also lagged the Retail-Wholesale sector, which fell 9.8%.
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Target has even underperformed its peers, such as Dollar General Corporation DG, Dollar Tree, Inc. DLTR and Costco Wholesale Corporation COST. While shares of Dollar General and Dollar Tree have risen 25.8% and 18.7% in the past three months, Costco has declined 6.4%.
TGT, DG, DLTR & COST Stock Past Three-Month Performance
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What’s Hurting TGT Stock?
Target issued a cautious first-quarter fiscal 2025 view. The Minneapolis, MN-based retailer anticipates significant year-over-year profit pressure in the first quarter compared to the rest of the year owing to ongoing consumer uncertainty, a slight decline in February net sales, tariff concerns and the expected timing of certain expenses throughout the fiscal year. We expect first-quarter earnings to decline 13.8% year over year.
While the company saw record Valentine’s Day sales in February, overall performance for the month was muted. Unseasonably cold weather across the United States weighed on apparel sales, and weakening consumer confidence led to softer demand in discretionary categories.
This remains a core vulnerability for Target, which derives a significant portion of its revenues from discretionary segments such as home goods, hard lines and apparel. These categories are inherently volatile and susceptible to external shocks. Compounding the uncertainty are persistent risks tied to U.S.-China tariff dynamics. Nonetheless, Target has made progress in diversifying its sourcing away from China.
Target’s guidance for fiscal 2025 remains measured. The company expects net sales to grow approximately 1%, with comparable sales remaining flat. While a modest improvement in the operating margin is anticipated, projected adjusted earnings of $8.80-$9.80 per share suggest only limited upside from the prior year’s $8.86, reinforcing the conservative tone of management's outlook.
Consensus Estimates for Target Trend Lower
Reflecting a cautious sentiment around Target, the Zacks Consensus Estimate for earnings per share has seen downward revisions. Over the past seven days, the consensus estimate for both the current and next fiscal has declined by 3 cents to $8.91 and $9.57, respectively. (See the Zacks Earnings Calendar to stay ahead of market-making news.)
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Unlocking Target’s Valuation
Target is currently trading at a forward 12-month price-to-earnings (P/E) multiple of 10.6X, which positions it at a discount compared to the industry’s average of 32.44X. The stock is also trading below its median P/E level of 14.68, observed over the past year.
Target is trading at a discount to Dollar General (with a forward 12-month P/E ratio of 16.03), Dollar Tree (15.85) and Costco (52.46).
Although Target stock is currently trading at a discount compared to its industry peers, this valuation disparity might not be as favorable as it seems. The lower price could be indicative of underlying issues rather than representing a clear investment opportunity.
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Here’s How Target is Repositioning Itself
With a $31 billion private label business and a multi-category offering that includes both essentials and discretionary items, Target continues to position itself as a one-stop shop for a wide range of consumers. The company’s plan to generate more than $15 billion in revenue growth by fiscal 2030 underscores its long-term vision, which includes the opening of more than 20 new stores and several remodels in fiscal 2025. Moreover, the continued expansion of its third-party marketplace, Target Plus, is on track to reach $5 billion in GMV over five years, broadening its product variety and adding another layer to its top-line potential.
Target is investing in AI-powered inventory systems and enhanced delivery through Shipt to streamline operations and improve customer satisfaction. Strong adoption of same-day services — up 25% in the fourth quarter — and a 13 million increase in Target Circle members in fiscal 2024 reflect rising digital engagement. These efforts, alongside a planned $4-$5 billion investment in fiscal 2025, support both near-term execution and long-term competitiveness.
How to Play TGT Stock?
Target is navigating a tough retail environment with ongoing challenges in discretionary spending, margin pressure and soft guidance weighing on investor sentiment. Although the company is investing in digital growth and operational improvements, the benefits may take time to materialize. For now, the stock lacks strong near-term catalysts. New investors may want to wait for clearer signs of recovery, while existing holders should consider reducing their position if short-term performance is a concern. TGT currently carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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