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.
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