Target stock price continued to underperform the retail sector in the past few years as its growth trajectory waned and competition rose. TGT peaked at $245 in 2021 and then crashed by over 45% to the current $133. So, what next for Target shares in 2025?
Target growth trajectory has waned
Target, one of the leading players in the US retail sector, has underperformed other companies in the industry.
Its annual revenue was $105.8 billion in the last financial year, down from $109 billion the previous year. In contrast, Walmart’s annual revenue grew from $648 billion to $648 billion in the same period.
Target’s management has worked to change this by investing in its stores, closing non-performing ones, and opening new ones. The company has also changed its DEI policies that led to criticism by conservatives that it had become a woke company.
Target has also invested in e-commerce and other digital channels through its 360 product, which added almost 3 million members in Q3. The most recent results showed that its sales revenue rose slightly from $25.39 billion in Q3 ’23 to $25.66 billion in Q3 ’24.
Target, like other retailers, has seen higher costs in the past few years, which have affected its profitability. Its quarterly earnings dropped from $971 million in Q3’23 to $854 in Q3’24.
Analysts anticipate that Target’s annual earnings per share (EPS) will be $8.63, down from $8.94 a year earlier. On the positive side, they expect its EPS will be $9.2 in the current financial year.
Target’s challenge is that its business is facing robust competition across the board, especially from Walmart. Walmart has continued to gain market share in the US, which explains why the stock has jumped to a record high and its valuation is a premium.
Analysts believe that Target is a highly undervalued company because of it past underperformance. The average stock target for the TGT stock price is $142, higher than the current level.
Target has a price-to-earnings ratio of 14.2, much lower than the sector median of 20.6. Its forward ratio of 15.6 is also lower than the median of 18.28. In contrast, Walmart has a trailing PE multiple of 37 and a forward ratio of 38.
Target is also working to boost its stock price. It has continued to reduce its outstanding shares, moving them from 551 million in 2017 to 458 million today.
Target stock price analysis
The weekly chart shows that the TGT stock has formed two bullish chart patterns that may push it higher in the long term. It has formed a bullish flag chart pattern, a popular positive view. It has formed an inverse head and shoulders chart pattern. The stock has moved above the 50-week moving average. Therefore, the stock will likely have a strong bullish breakout, with the next level to watch being at $180.
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