Target (TGT) announced the elimination of 1,800 corporate positions, the retailer's first major workforce reduction in a decade. Target is cutting roughly 8% of its headquarters staff as incoming CEO Michael Fiddelke attempts to reverse four years of stagnant sales.
Valued at a market cap of $43 billion, TGT stock is down 65% from all-time highs, underperforming peers such as Walmart (WMT) and Costco (COST). In the last 10 years, Target stock has returned 73% to shareholders after adjusting for dividend reinvestments. In this period, Walmart and Costco have returned 564% and 620%, respectively.
Target expects revenue to decline year-over-year (YoY) in fiscal 2026 (ending in January), indicating the big-box retailer is wrestling with inventory management and store traffic.
The retail giant generates 50% of its sales from discretionary products compared to 40% for Walmart. This product mix makes Target more vulnerable to economic downturns and shifting consumer sentiment. When household budgets tighten, shoppers cut back on the fashion and home goods that Target relies on.
The layoffs suggest Target lacks the operational efficiency and strategic clarity needed to compete effectively in a challenging macro environment.
Is Target Stock a Good Buy Right Now?
The Minneapolis-based retailer saw some improvement in the second quarter, with traffic and comparable sales trends strengthening from the first quarter, particularly in physical stores. Gaming, toys, and trading cards showed notable strength as customers responded to new products and innovation. Store experience metrics, including on-shelf availability, also improved, which indicates operational progress.
Target’s management has acknowledged that results in recent years have fallen short of expectations and potential. The retail giant continues to wrestle with headwinds from reduced discretionary spending amid inflationary pressures on household budgets.
As one of the country's largest importers, Target has devoted significant resources to managing tariff impacts through product development adjustments, sourcing changes, and supply chain modifications. While it expects some short-term pressure on profit margins, management believes the bottom line will expand over the next 18 months.
The retailer emphasized its competitive advantages, including nearly 2,000 well-located stores, a $31 billion owned brand portfolio, and partnerships with beloved national brands. Target Circle remains one of the most extensive loyalty programs in the country, supporting growing high-margin businesses like advertising platform Roundel.
Management acknowledged needing to do better and stressed the urgency of building consistent momentum. The leadership change signals recognition that a fresh perspective may be necessary to unlock Target's full potential.
Is TGT Stock Undervalued Right Now?
Analysts tracking TGT stock forecast sales to increase from $106.6 billion in fiscal 2025 to $117.5 billion in fiscal 2030. In this period, adjusted earnings are forecast to expand from $8.86 to $10.20.
Today, the stock trades at a forward price-to-earnings multiple of 12.1x, which is below its 10-year average of 15.8x. If TGT maintains its 12x earnings multiple, it should trade around $125 in early 2029, suggesting upside of about 30% from current levels. If we adjust for dividends, cumulative returns could be closer to 50%.
Out of the 37 analysts covering TGT stock, eight recommend “Strong Buy,” three recommend “Moderate Buy,” 20 recommend “Hold,” one recommends “Moderate Sell,” and five recommend “Strong Sell.” The average TGT stock price target is $105.38, above the current price of $97.30.
