TLDR
- Target reports Q2 FY26 earnings on August 19, with the options market pricing in a 7.08% move in either direction
- TGT stock is up 59% year-to-date and was trading at $155.51, but Bank of America holds an Underperform rating with a $124 price target
- BofA raised its Q2 EPS estimate by 3% to $2.34, forecasting 2.5% comparable sales growth and ~90 basis points of gross margin expansion
- Wall Street consensus expects Q2 EPS of $2.32, up 13.2% year-over-year, with net sales rising 3.6% to $26.12 billion
- Wall Street has a Moderate Buy consensus with 12 Buys, 15 Holds, and 2 Sells; average price target of $143.15 implies about 8% downside
Target is set to report fiscal second-quarter results on August 19, and the setup heading into earnings is a mixed one. TGT stock closed at $155.51 on Thursday, up about 1% on the day, and has now rallied 59% year-to-date.
The options market is pricing in a 7.08% swing in either direction after the print. That works out to roughly an $11 move, putting the implied bullish target at $166.52 and the bearish floor at $144.50.
For context, Target’s last four post-earnings moves averaged 4.93% in absolute terms, so the implied move is above that historical average.
Wall Street expects Target to post Q2 EPS of $2.32, representing 13.2% year-over-year growth. Net sales are forecast to rise 3.6% to $26.12 billion.
BofA Sees Risk Despite Better Numbers
Bank of America analyst Chris Nardone raised his Q2 EPS estimate by 3% to $2.34 and his full-year EPS estimate to $8.84. He also forecasts comparable sales growth of 2.5% for Q2, slightly above the 2.3% consensus.
On margins, BofA expects gross margin expansion of about 90 basis points, around 20 basis points ahead of consensus. That would build on Q1’s gross margin improvement to 29% from 28.2% a year earlier.
Despite those raised estimates, Nardone kept his Underperform rating and lifted his price target to $124 from $110. With the stock at $155.51 at the time of the note, that target implies about 19% downside.
BofA’s concern centers on valuation. Target is trading at roughly 17 times fiscal 2027 earnings estimates, up from around 14 times after Q1. BofA’s price target is based on a 14-times multiple, which they say is in line with Target’s historical valuation.
A Different View from Wolfe Research
Not everyone is cautious. Wolfe Research analyst Spencer Hanus raised his price target to $169 from $162 and kept a Buy rating. Hanus lifted his Q2 same-store sales growth estimate to 3%, citing acceleration in Target’s turnaround.
He expects Q2 gross margin to beat expectations and noted that any weakness driven by positioning after the print could be a buying opportunity for investors looking at second-half upside.
Target is also investing heavily in its recovery. The company plans roughly $1 billion in incremental operating investment this year, covering store payroll and training. Capital spending is being raised by more than $1 billion to around $5 billion, targeting new stores, remodels, and supply-chain work.
BofA flagged SG&A as a wildcard. Target’s Q1 adjusted SG&A rate already ticked up to 21.9% from 21.7% a year ago.
Wall Street’s overall consensus sits at Moderate Buy, with 12 Buys, 15 Holds, and 2 Sells. The average price target of $143.15 implies roughly 8% downside from current levels.
Stop guessing and start investing with confidence. KnockoutStocks gives you the AI insights, market intelligence, and stock research you need to spot opportunities, cut through the noise, and make smarter investment decisions — all in one powerful platform.
Sign up today and get 50% OFF full access to our premium stock picks.
Simply use coupon code SPECIAL50 at checkout to claim your exclusive discount.
Get 3 Free Stock Ebooks
Discover top-performing stocks in AI, Crypto, and Technology with expert analysis.
- Top 10 AI Stocks - Leading AI companies
- Top 10 Crypto Stocks - Blockchain leaders
- Top 10 Tech Stocks - Tech giants
