Target Corp (NYSE:TGT) is set to release third-quarter earnings on November 19, with analysts warning of potential headwinds in sales and margins amid slowing digital growth and broader retail pressures.
Bank of America projects the retailer will report adjusted earnings of $1.67 per share and a 1% decline in comparable-store sales, slightly below consensus estimates of $1.72 per share and a 1.8% drop in comps.
“Observed sales for Target slowed in Q3, implying potential downside to both our and Street comp forecasts,” the firm wrote in a note to clients.
While gross margins are expected to remain flat year-on-year, the bank noted that easing comparisons to the port strike last year and lower one-time expenses may provide some relief. However, ongoing tariff exposure, inventory adjustments, and purchase cancellations could continue to pressure results.
Target is also underperforming peers in digital sales and investment returns. Bank of America highlighted that online sales and mobile app engagement remain below competitors like Walmart, limiting the company’s ability to leverage digital advertising and third-party marketplace growth to offset margin pressures.
On the bullish side, the bank noted Target’s valuation appears attractive, with a 12-times forward price-to-earnings ratio below historical levels and peers, and recent price reductions on essential items may support its value perception. Merchandising initiatives, including owned brands and partnerships, could also improve the retailer’s product appeal over time.
Despite these positives, Bank of America maintained an Underperform rating, citing “increasing longer-term sales and margin risks on slowing digital sales growth, a lack of scale in digital advertising and third-party marketplace, elevated tariff, pricing and merchandising headwinds, and growing competition from Walmart and Amazon.”
Target shares were last trading at $89.06, slightly below the bank’s price target of $93.