Target’s turnaround faces execution risks, says Bank of America

Bank of America analysts maintained their ‘Underperform’ standing connected Target Corp (NYSE:TGT) pursuing the retailer’s caller net release, citing cautious optimism implicit the company’s turnaround efforts.

The steadfast besides raised its terms people somewhat to $106 from $103, reflecting modestly improved borderline expectations.

The analysts attended Target’s Community Day astatine the company’s Minnesota office and highlighted the retailer’s absorption connected “investing successful its people, stores, and merchandise and making the biggest alteration to its store level pad successful implicit a decade,” which they described arsenic a logical strategy.

“We are encouraged by the actions being taken but deliberation the quality to thrust sustainable affirmative postulation & comp maturation whitethorn instrumentality longer than the marketplace expects based connected the important aggregate rerating already seen successful the stock,” they wrote.

Target plans to put an incremental $1 cardinal successful superior expenditures and $1 cardinal successful its P&L successful 2026, covering caller store openings, remodels, updated merchandising layouts, payroll, marketing, technology, and AI initiatives. “Store changes are highlighted by doubling down connected newness crossed each category,” the analysts wrote, highlighting the retailer’s propulsion to refresh its merchandise and buying experience.

Bank of America noted that archetypal 4th net whitethorn beryllium the debased constituent of the twelvemonth owed to higher startup costs for caller stores, front-loaded SG&A, and the thigh of anterior accrual adjustments.

“We find it hard to exemplary affirmative comp maturation each 4th beyond Q1 without seeing much impervious of an inflection successful discretionary categories,” they wrote.

Despite raising their fiscal 2026 EPS estimation by 3% to $7.60, the analysts reiterated caution. “We reiterate our ‘Underperform’ and stay cautious astir an inflection to sustainable comp maturation fixed aggravated contention and constricted greenish shoots successful discretionary categories,” they wrote.

Shares of Target traded hands astatine astir $122 successful the aboriginal day connected Wednesday, up astir 25% truthful acold this year.