Target is yielding 4.2% with a P/E ratio in the low teens.
Sales have been sliding for three years, but a new CEO takes the reins next week.
Analysts see a return to top- and bottom-line growth at Target in each of the next three years.
Pick a timeline — almost any timeline — and Target (NYSE: TGT) has been a market laggard. Shares of the discount retailer have fallen 20%, 33%, and 41% over the past one-, three-, and five-year periods, respectively. Wall Street has taken its shots at Target’s bull’s-eye.
The one recent stretch of time in which Target is a market thumper is the shortest. The retail stock has soared 11% year to date, ahead of more than 80% of the other S&P 500 components. Speaking to its merit as an undervalued investment, among the S&P 500 stocks that have posted double-digit percentage gains this young year, only four have a lower P/E ratio than Target’s trailing multiple of 13.
The cheap chic retailer is cheap. It’s also starting to feel chic. Can its early momentum in 2026 make the stock a winner over the next few years? Let’s take a look at where Target shares might be three years from now. Spoiler alert: Target stock is unlikely to lose another third of its value between now and early 2029, as it has over the last three years.
I don’t want to understate the bearish scenario that got Target to where it is today. The chain has earned many of the downticks that it has collected in recent years. Every retailer has its misses, and even when Target was ascending — as it largely was for decades until five years ago — it proved mortal every so often. There was the 2013 data breach that potentially impacted 110 million customers. There have been merchandise calls and shop-in-a-shop decisions that have failed to resonate with its shopper base. Target survived through the stumbles because they were few and far between.
The past couple of years have been rough. Target took a pair of politically charged gambles. It once stocked merchandise that celebrated cultural diversity. It was a retail leader on the DEI initiative front. When it faced backlash and boycott calls from the right, it pulled back. This only led to backlash and calls for boycotts from the left. Instead of pleasing one side of the political spectrum, Target whipsawed itself into alienating both. It can recover, but the damage has been done.
After net sales surged following the pandemic in 2020 and 2021, growth decelerated sharply in 2022. It has only gotten worse. Net sales are now declining for the third year in a row, sliding 1.7% through the first nine months of the current fiscal year that ends later this week. The same Target that was historically gaining market share is now bequeathing it.