Wolfe Research has moved Target to the top of its list among big-box retailers as investors head into year-end, upgrading the stock to an Outperform rating and highlighting what it describes as better execution and faster store redevelopment work that are helping to bring shoppers back to the chain.
Valuation and EPS outlook
The firm placed a $160 price target on Target, a level that it says implies meaningful upside from then-current share prices, and it estimated downside risk at roughly $120. Wolfe Research’s modeling assumes Target could reach about $9 in earnings per share in 2027 and applies a 17x multiple to support the $160-plus target.
Operational momentum and store work
Wolfe highlighted a renewed operational cadence at Target, pointing to accelerating summer store resets, improving execution and changes in leadership that are reshaping how the company runs its stores. The firm described the retailer as regaining destination status, making the equity story more compelling for an idea that has been the subject of debate among investors.
According to Wolfe, store resets are proceeding faster than in recent years, and the firm said it has been impressed with what it has observed to date. Those efforts, together with reduced out-of-stocks and new partnerships, are expected to support stronger traffic into the back half of the year.
Sales trends and analyst commentary
Other Wall Street participants have pointed to a firmer start to the year for Target. UBS noted a recovery in first-quarter comparable sales driven by broader traffic gains, while Guggenheim retained a Buy rating and highlighted Target’s new collaboration with Isaac Mizrahi as part of a wider push to lift product design.
Target beat expectations in the first quarter with same-store sales rising 5.6 percent, though flow-through to the bottom line was limited as the company reinvested in its operations. Wolfe Research is modeling second-quarter same-store sales of 2.5 percent, above consensus at 1.9 percent, and suggests momentum could pick up later this year as the combined effects of store resets, inventory improvements and partnerships translate into repeat visits.
Earnings revisions and multiple expansion potential
Wolfe revised its earnings outlook higher, increasing its 2026 EPS estimate to $8.48. That figure sits above the midpoint of management’s guidance range and compares with consensus at $8.37; management’s guidance upper bound for 2026 was noted at $8.50. For 2027, Wolfe moved its estimate to $9.52 versus consensus at $8.95. At the time of the note, Target was trading at about 15.5 times earnings, and Wolfe indicated the multiple could expand into the 17-18x range as EPS growth and multiple expansion together drive returns.
Customer mix and recent traffic drivers
Wolfe singled out trends in new-customer growth as a positive, reporting that in the most recent four-week period new-customer trends accelerated to 4.1 percent compared with a negative 8.0 percent trend over the prior 52 weeks. The firm acknowledged that tax refunds provided a one-time lift, but also emphasized that stores were in notably better condition, which increases the chance shoppers will return.
Conclusion
Overall, Wolfe Research’s upgrade rests on a combination of operational improvements, faster store transformation work, improving new-customer trends and upward revisions to longer-term earnings estimates. The firm’s price target and downside estimate frame its risk-reward view while its modeling suggests both earnings growth and multiple expansion could contribute if momentum continues.
Note: This article reports Wolfe Research’s published views on Target and summarizes the firm’s stated models and assumptions as described in its research note.