TLDR
- Wolfe Research upgraded Target (TGT) to Outperform and named it a Top Pick into year-end
- Analyst Spencer Hanus set a $162 price target, implying ~25% upside from Monday’s close of $129.73
- Target posted its first positive same-store sales growth in five quarters in Q1 2026, with net sales of $25.44 billion, up 7% year-over-year
- New customer trends have accelerated to +4.1% over the last four weeks, reversing a 52-week trend of -8%
- Wolfe downgraded Home Depot and Five Below to Peer Perform on the same note
Target stock edged higher in pre-market trading Tuesday after Wolfe Research upgraded the retailer to Outperform and named it a Top Pick into year-end.
Analyst Spencer Hanus set a price target of $162, about 25% above Monday’s closing price of $129.73.
Hanus said Target’s story “has a rhythm that we haven’t seen in years,” driven by store resets, better execution, and a new leadership team.
Target brought in two former C-suite executives from Nike and Walmart to its board in January, and the effects are starting to show up in the numbers.
In Q1 2026, Target reported its first positive same-store sales growth in five consecutive quarters. Net sales hit $25.44 billion, up 7% from the same period a year ago.
The retailer also beat expectations on both the top and bottom lines, ending a run of four consecutive quarters of sales decline.
Hanus raised his 2026 EPS estimate to $8.48 and set his 2027 estimate at $9.52, ahead of the $8.95 consensus. His $160 price target on the EPS note is based on a 17x multiple on mid-$9 EPS.
New customer trends have accelerated to +4.1% over the last four weeks, a sharp swing from the 52-week trend of -8%. Hanus called it “a significant directional improvement.”
He said Target is now rapidly adjusting its stores for summer, and his team is impressed by what they’ve seen on the ground.
“Target is becoming a destination once again, and for a stock that is still very debated, the future is increasingly compelling,” Hanus wrote.
Two Downgrades Come with the Upgrade
The same note brought two downgrades. Wolfe cut Home Depot to Peer Perform, citing the persistent lock-in effect in the housing market, ROIC dilution from large Pro segment acquisitions, and rising rate risks.
Hanus said real legislative action to free up the housing market would be “a Mid-2027 event at the earliest.” Wolfe said it prefers Lowe’s within the home improvement space for more idiosyncratic upside.
Five Below was also cut to Peer Perform. Hanus flagged signs that the Dumpling product trend is fading, with Google Trends data showing declining search interest and store checks pointing to flat demand.
He modeled Five Below’s Q1 2027 same-store sales at -8%, well below the Street consensus of -1.3%.
Wall Street Still Cautious Overall
Despite the upgrade, the broader Wall Street view on Target remains mixed. The stock carries a Moderate Buy consensus, built from 12 Buys, 14 Holds, and 2 Sells over the past three months.
The average analyst price target sits at $136, implying only about 5% upside from current levels — well below Wolfe’s $162 target.
TGT was up 2.59% on Tuesday following the upgrade.
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