Jefferies analyst Corey Tarlowe moved Target Corp to the top of his retail coverage, lifting his price target to $177 from $161 and retaining a Buy rating on the Minneapolis-based retailer. The change reflects, in Tarlowe's view, a merchandising-driven recovery that is gaining traction across multiple categories.
Tarlowe raised his comparable sales forecast for Target's second quarter to 2.5%, versus a consensus estimate of 2.1%. He also adjusted his expectation for second-quarter adjusted earnings per share to $2.35, compared with consensus of $2.30. Those revisions accompany proprietary Jefferies foot traffic data that showed July traffic accelerating to 6.2% from 3.3% in June, a signal the analyst interprets as support for the merchandising improvements.
Merchandising changes highlighted
The analyst cites an expansive assortment overhaul as the central driver of the thesis. Specific changes called out include an expanded Wellness category, the addition of 3,000 Beauty products spanning 60 new brands, a reset of 75% of Home decorative accessories, and a Back-to-School assortment that Tarlowe says is more than 50% new since the start of the year.
Tarlowe contends that investors have not fully priced in the scale of Target's merchandising transformation or the lasting lift to traffic that may follow these resets. He further identifies a potential margin recapture opportunity if comparable sales inflect positively in 2026.
Fiscal outlook and valuation basis
For fiscal 2026, Jefferies models revenue of $109.2 billion and adjusted EPS of $8.59, which the note describes as slightly above consensus estimates. The new $177 price target is underpinned by a fiscal year 2 price-to-earnings multiple of 19.8x and an enterprise value-to-EBITDA multiple of 10.3x.
What this means for markets and sectors
- Retail merchandising and consumer discretionary sectors are central to Jefferies' thesis, with implications for peers that are also executing assortment and traffic strategies.
- Category-level moves in Wellness, Beauty, Home, and seasonal Back-to-School assortments are depicted as direct levers for traffic and comparable sales performance.
Concluding perspective
Jefferies' upgrade frames Target's recent assortment work as a measurable, portfolio-wide reset that has begun to show up in store traffic and modeled sales and earnings. The call couples category-level changes with a valuation framework that assumes continued recovery in comparable sales, and it highlights a potential margin upside if those sales trends improve into 2026.