All eyes may be on Walmart’s (WMT) earnings this week, but Target (TGT) is also drawing close attention from retail analysts. The company is set to release its earnings next Wednesday morning, and many in the industry are bracing for what could be a challenging report. Some experts believe Target’s stock could face additional pressure as it navigates a challenging retail environment.
Oppenheimer recently lowered its price target for Target yet notably kept its “outperform” rating on the stock. In a research note released Wednesday, the firm acknowledged that Target’s short-term outlook looks tough but suggested that this could be an ideal opportunity for investors to buy the stock at a discounted valuation. According to Oppenheimer, the current weakness may set the stage for a longer-term rebound.
The firm expects Target to report a 4% decline in comparable sales for the first quarter compared to the same period last year. It also projects earnings per share (EPS) of $1.14, which falls well below the average analyst estimate of $1.68, based on data compiled by Visible Alpha. This significant gap has raised concerns about the company’s near-term profitability.
Target’s earnings pressure may be linked to a slowdown in consumer spending, particularly in discretionary categories like beauty and personal care. Additionally, Oppenheimer noted that the retailer may be facing backlash from some customers after it scaled back specific diversity, equity, and inclusion (DEI) initiatives. These factors could be contributing to weaker store performance and a more cautious outlook.
Looking ahead, Oppenheimer believes that Target might revise its full-year earnings guidance. The firm now estimates Target will report $7 in EPS for 2025—considerably lower than the company’s previous guidance, which ranged from $8.80 to $9.80. If Target lowers its forecast, it could influence investor sentiment even further as the retail giant works to regain its momentum in a shifting consumer landscape.
Oppenheimer Again Cuts Price Target
Oppenheimer has lowered its price target for Target (TGT) for the fifth time since March 2024, now setting a new target of $130 per share. This revised estimate is roughly 5.5% higher than the current consensus target from Visible Alpha and stands 36% above Target’s share price of $95.11 as of Wednesday afternoon. Despite this adjustment, shares were down nearly 3% on the day and have fallen by almost 30% year-to-date.
However, Oppenheimer remains confident in Target’s long-term growth potential. In its latest research note, the firm emphasized that the retailer is well-positioned to gain market share through a combination of digital expansion, strategic store investments, and the success of its exclusive merchandise brands. The firm also cited competitor liquidations and strategic partnerships with other brands and retailers as additional tailwinds that could support Target’s future performance.
Frequently Asked Question
Why does Oppenheimer believe Target stock may be squeezed in 2025?
Oppenheimer expects a potential short squeeze due to Target’s currently undervalued stock price, improving fundamentals, and the likelihood of positive momentum from strategic initiatives and more substantial earnings growth in late 2025.
What is a stock squeeze, and how does it relate to Target?
A stock squeeze, specifically a short squeeze, occurs when short sellers are forced to buy back shares due to rising prices, driving the price even higher. Target’s stock, having declined significantly, could become a candidate if positive catalysts trigger rapid gains.
What factors could drive Target’s stock price higher in 2025?
Oppenheimer highlights Target’s investments in digital expansion, exclusive brand merchandising, improved supply chain, and potential competitor closures as key growth drivers that could elevate its stock price.
How does Target’s current valuation support a potential squeeze?
With shares trading well below historical averages and Oppenheimer’s revised price target set at $130, Target’s stock may be seen as undervalued, attracting bargain hunters and institutional buyers.
What role do short sellers play in a possible stock squeeze for Target?
If many investors are betting against Target and the stock begins to recover unexpectedly, short sellers could be forced to cover their positions quickly, amplifying demand and fueling a sharp price surge.
How have Target’s earnings expectations changed leading into 2025?
Oppenheimer projects a drop in EPS to around $7 for 2025, down from prior guidance of $8.80–$9.80. However, this lowered bar could make it easier for the company to outperform and surprise the upside.
What strategic moves is Target making to regain investor confidence?
Target is focusing on enhancing its e-commerce platform, expanding store remodeling projects, strengthening partnerships, and streamlining its product mix—especially in private-label and exclusive brands.
Conclusion
Oppenheimer’s forecast of a potential stock squeeze for Target in 2025 is rooted in a blend of undervaluation, market positioning, and strategic improvements. Despite short-term headwinds—such as declining sales and lowered earnings guidance—the firm remains confident in Target’s long-term potential. Key initiatives, including digital transformation, exclusive brand performance, store investments, and the fallout of weaker competitors, support its belief. As market sentiment begins to shift and fundamentals gradually improve, Target’s currently depressed stock price could spark renewed investor interest and potentially trigger a squeeze. For long-term investors, this period of weakness may present a compelling opportunity to enter before momentum builds in 2025.