Target (TGT) Jumps 6.7% as Bernstein Upgrade Adds Fuel to the Rally

TLDR

• Bernstein upgraded TGT from “underperform” to “market-perform,” citing expected tax refunds and Fed rate cuts as near-term tailwinds
• Target stock jumped 6.74% on Tuesday, closing at $120.80, snapping a three-day losing streak
• Full-year 2026 guidance calls for net sales growth in every quarter, with EPS of $7.50–$8.50
• Target plans $5 billion in capital expenditures in 2026, including 30 new stores and AI/tech investments
• FY2025 results were weak — net income fell 9.4% to $3.7 billion, net sales dropped 1.7% to $104.78 billion

Target Corporation (TGT) stock rose more than 6% on Tuesday after the retailer posted full-year results and laid out a growth plan for 2026. The stock closed at $120.80.

Target Corporation, TGT

Analysts at Bernstein followed up on Wednesday with a rating upgrade, moving TGT from “underperform” to “market-perform.” The firm cited a more balanced risk-reward profile going forward.

Bernstein analysts Zhihan Ma and Jeremy Mills pointed to expected tax refunds and anticipated interest rate cuts as potential drivers of consumer spending this year. They said those factors could support Target’s near-term momentum.

The analysts also credited management for taking steps to address the retailer’s recent struggles. Target has acknowledged it lost focus in key categories, particularly home goods, and underinvested in stores and labor.

To fix that, Target is rolling out a staggered reinvention of its home assortment and store displays. It’s also prioritizing speed to market in apparel and committing $1 billion funded by cost savings to store and labor investments.

2026 Guidance Tops Estimates

Target’s 2026 outlook came in ahead of Wall Street expectations. The company guided for adjusted EPS of $7.50 to $8.50, above the Bloomberg consensus of $7.61 at the midpoint.

Full-year net sales are expected to grow “in a range around 2%” versus 2025. That includes a small rise in comparable sales, with new stores and non-merchandise revenue adding more than one percentage point of growth.

Operating income margin is forecast to be about 20 basis points higher than 2025’s 4.6% level.

AI and Store Expansion in Focus

Target’s growth strategy leans on technology. The company said it plans to accelerate AI adoption as part of its push to drive efficiency and improve the customer experience.

The $5 billion capital expenditure plan covers new stores, remodels, technology, and supply chain. Target expects to open 30 new stores this year, working toward a goal of 300 new locations by 2035.

Later this month, it will open its 2,000th store in Fuquay-Varina, North Carolina.

The backdrop for all this planning is a rough 2025. Full-year net income dropped 9.4% to $3.7 billion, down from $4.09 billion in 2024. Net sales fell 1.7% to $104.78 billion.

In Q4 alone, net income slipped 5.2% to $1.05 billion, and net sales declined 1.5% to $30.45 billion.

Several other Wall Street analysts raised their ratings or price targets for TGT following Tuesday’s results. TGT was trading slightly higher in premarket on Wednesday.

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