Target will get a boost from merchandising revamp and tech investments, says Telsey

Target’s merchandising and technology refresh could support earnings growth going forward, according to Telsey Advisory Group. The research firm upgraded the retailer to an outperform rating from market perform. Analyst Joseph Feldman also raised his price target to $145 from $110, which implies a gain of 20%. “We are upgrading our rating on TGT shares to Outperform to reflect our confidence in the company’s strategy to drive growth by recapturing its Tarzhay merchandising magic, enhancing the customer experience, and leveraging technology and AI across operations, including stores and fulfillment to make more informed, faster decisions,” Feldman wrote. TGT 1Y mountain TGT 1Y chart The analyst applauded Target’s plans on the merchandising side to refresh its assortment across key categories with more on-trend items. The company also plans to adopt greater speed from concept to delivery, more effective in-store displays, expanded license assortment and improved and immersive services. Feldman noted that Target continues to improve fulfillment and boost loyalty through its Target Circle. The company is also adopting new technologies that could also provide a tailwind for its stock. “On the technology side, the company is enhancing technology infrastructure and AI across the organization, including its Target Trend Brain tool in merchandising that uses AI to identify emerging fashion trends, new technologies to automate planograms and reduce associate tasks, and support retail media, which continues to integrate the company’s first-party data with technology partners like Google and Meta,” the analyst said. He noted that Target plans to invest an incremental $2 billion in 2026 to help support these initiatives. Feldman added that the fundamental path for Target looks healthy going forward. The company expects sales and earnings growth in the long term. “While still a show-me story, we believe Target laid out a path at its investor day to achieve 2026 sales growth of ~2%, including a positive comp, and EPS growth of MSD at the midpoint of the guidance range of $7.50-$8.50,” he said. “These initiatives and targets, combined with our recent store visits and company-displays at the event increase our confidence that Target is back on the right track to drive healthy earnings growth, which should support stock price outperformance.” Shares of Target have rallied 24% this year and are up 3% over the past 12 months.