By Teresa Rivas
It's a down day for the market, but not for Target: The big-box retailer got an upgrade from Wolfe Research, the latest vote of confidence for its nascent turnaround.
Target was up 2.8% to $133.32 early Tuesday morning, after Wolfe analyst Spencer Hanus boosted his rating on the shares to Outperform from Peer Perform, establishing a $162 price target, implying more than 20% upside. The move comes after he raised his rating from Underperform at the end of January.
"Summer store resets are accelerating, and we've been impressed by what we've seen so far," he writes. "Target is becoming a destination once again, and for a stock that is still VERY debated, the future is increasingly compelling."
Hanus acknowledges that Target is no stranger to turnarounds, but this one seems like it's sticking. He expects same-store sales, which came in at a better-than-expected 5.6% in the recently completed fiscal first quarter, could continue to be a bright spot in the second half of the year, as the company fixes out-of-stock issues and announces new partnerships -- sometimes with familiar faces.
Some of that progress is already showing up in recent traffic trends. Over the past four weeks, new-customer growth has accelerated. Tax refunds could explain some of that, but "Target's stores were in much better condition, so the likelihood of repeat visits is higher, and we are seeing that in the data," Hanus writes.
"Target has also moved away from the center of the Culture Wars, which we think protects the business and investors."
All of that leads him to believe that, even with the shares up about 36% year to date, investors are still underestimating the stock.
He raised his fiscal 2026 earnings-per-share estimate to $8.48, above the consensus estimate of $8.37 and toward the high end of management's guidance of $7.50 to $8.50.
For 2027, he thinks Target can earn $9.52 a share, comfortably above the average analyst estimate of $8.95. That earnings growth should support a higher valuation, as Hanus believes the stock's price-to-earnings multiple can expand from about 15.5 times earnings to 17 or 18 times.
He isn't the only optimistic voice on Wall Street.
At the start of the year, the average analyst price target was $100, but that's now risen to $135, keeping pace as the stock has rallied.
Analysts from Bernstein and Telsey Advisory Group also upgraded the shares in March following new CEO Michael Fiddelke's inaugural investor day, which focused on the company's strategy on improving stores and merchandise to bring shoppers back.
That said, there is still work to do. Even after this year's rally, the stock remains roughly 50% below its pandemic-era high.
Write to Teresa Rivas at teresa.rivas@barrons.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
June 23, 2026 11:20 ET (15:20 GMT)
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