Target Corp (NYSE:TGT) shares fell around 1.6% Friday after Bank of America downgraded the retailer to “Underperform” from “Neutral,” citing what it described as deteriorating long-term prospects.
BofA lowered its price target to $93 from $105, noting that Target is lagging behind competitors on sales, digital growth, and strategic investments.
The bank highlighted Target’s elevated exposure to tariffs, pricing pressures, and merchandising challenges as additional headwinds.
“Target is underperforming on digital growth and investments,” BofA analysts wrote, pointing to July data showing monthly active users of Target’s mobile app down 4.1% year-on-year, compared with 17.2% growth for Walmart’s US app.
Online sales growth at Target, estimated at 5-6%, also trails Walmart’s roughly 20-25% growth.
The report noted that Target’s higher import exposure, around 50% of cost of goods sold, could require larger price increases than peers to offset tariffs. Recent merchandising and partnership changes, including with Ulta Beauty, may further exacerbate risks.
BofA said the downgrade is not a reflection of Target’s upcoming second-quarter earnings, which are due on August 20. The bank now forecasts adjusted EPS of $1.92, up from $1.50, citing benefits from shrink reduction despite weak sales.
“Target’s longer-term outlook is becoming more uncertain,” the analysts wrote.