Retail Giant Target Takes a Knock as RBC Capital Lowers Price Target to $99
Wall Street is taking a cautious, yet still optimistic, stance on Target Corporation, the retail giant known for its distinctive red bullseye. In a recent move that underscores the ongoing challenges in the consumer market, RBC Capital Markets has trimmed its price target for Target’s stock (TGT).
The firm adjusted its valuation, moving the price target down to $99.00 from the previous $107.00. Despite the reduction, the analysts, led by Steven Shemesh, chose to keep their ‘Outperform’ rating on the stock, suggesting they still see a positive long-term trajectory for the retailer.
In-Line Results, But a Long Road Ahead
The timing of the update follows Target’s release of its third-quarter 2025 financial results. The company reported adjusted earnings per share (EPS) of $1.78, which actually beat the consensus analyst estimate of $1.71. This performance was described by the company’s leadership as being “in line with our expectations,” a sign that their projections were on target amidst a challenging retail environment.
However, a closer look at the details reveals the source of the market’s caution. While the EPS was a beat, total net sales for the quarter came in at $25.3 billion, a slight drop of 1.5 percent compared to the same period the year prior. The most telling sign of consumer strain was the continued “softness across the broader discretionary portfolio.” This means while shoppers are still coming in for essentials like food and beverages—which saw comparable sales growth—they are pulling back on items like apparel, electronics, and home goods.
The Deteriorating Macro and the Cost of Reinvestment
RBC’s analysts acknowledged the in-line results and were encouraged by some of the strategic initiatives Target outlined in its earnings call, particularly efforts to use technology to improve the shopping experience and the growth in its digital and same-day delivery services. Digital comparable sales, for instance, grew by 2.4 percent, with same-day delivery services showing more than 35% growth.
The reduction in the price target, then, appears to be less about a failure in execution and more about a bigger picture concern. The analyst noted that the path back to significant growth for Target “seems long,” and it’s still “unclear how much reinvestment will be needed.” In fact, Target has already signaled plans to increase its capital expenditures to $5 billion next year, focusing on new stores, technology, and merchandising improvements.
This uncertainty, combined with what the firm calls a “deteriorating macro” environment—the general economic slowdown affecting consumer spending—led RBC to apply a lower assumed earnings multiple in their valuation model, shifting it from 14-times to 13-times their earnings estimate. For investors, the takeaway is clear: the core business remains strong, but the company must navigate a cautious consumer landscape and invest heavily to secure its future growth, factors that temper near-term valuation expectations.
