Down 50% From All-Time Highs, Can Target Stock Finally Recover In 2026?

Key Takeaways:

• Strategic Transformation: Target is investing $5 billion in CapEx for 2026 to revamp stores and accelerate growth initiatives.
• Price Projection: Based on current execution, TGT stock could reach $135 by January 2028.
• Potential Gains: This target implies a total return of 18% from the current price of $115.
• Annual Return: Investors could see roughly 9% growth over the next 2 years.

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Target Corporation (TGT) is undergoing a major transformation as new CEO Michael Fiddelke takes the reins from Brian Cornell. Despite posting comparable sales down 2.7% in Q3, the company outlined an aggressive turnaround strategy during its recent earnings call.

• The retailer now plans to invest approximately $5 billion in capital expenditures for fiscal 2026, representing a $1 billion increase from current levels.
• This marks the most significant store transformation in a decade, targeting key categories like Home, Baby, and the newly reimagined Fun 101 division.
• Target’s digital ecosystem continues to show strength, with same-day delivery growing by over 35% and the Target Circle 360 membership driving engagement.
• The company’s retail media business, Roundel, posted mid-teens growth, while the Target Plus marketplace saw nearly 50% growth in GMV.
• Management highlighted meaningful progress in inventory availability, with the top 5,000 most-purchased items showing a 150-basis-point improvement compared to last year. These items represent 30% of total unit sales and are critical to customer satisfaction.

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What the Model Says for Target Stock

We analyzed Target through its transformation phase as the company repositions itself for sustainable growth after several challenging quarters.

The retailer benefits from multiple strategic initiatives, gaining traction. The Fun 101 reimagining of Hardlines categories delivered strong results, with toys posting nearly 10% comparable sales growth in Q3.

• This demonstrates that when Target applies focused merchandising authority with trend-forward products, customers respond positively.
• Target’s technology investments are accelerating time-to-market.
• The company deployed AI-powered tools like Target Trend Brain for merchants and a Gen AI gift finder for customers.
• These capabilities help identify emerging trends faster and personalize the shopping experience.
• Target plans to reconfigure its store portfolio by market, optimizing each location’s role between in-store shopping and digital fulfillment.
• Early pilots in Chicago showed improved guest experience and lower fulfillment costs.

Using a forecast of 1% annual revenue growth and 4.6% operating margins, our model projects the stock will rise to $135 within 2 years. This assumes a 15.2x price-to-earnings multiple.

That represents comparative P/E against Target’s historical P/E averages of 12.5x (one year) and 16.1x (five years). The lower multiple reflects near-term headwinds from soft discretionary spending and the investment phase required for the turnaround.

The real value lies in capturing Target’s unique position as a design-led retailer that delivers trend-forward products at accessible prices, while leveraging its massive store footprint for efficient omnichannel fulfillment.

Our Valuation Assumptions

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Our Valuation Assumptions

TIKR’s Valuation Model lets you plug in your own assumptions for a company’s revenue growth, operating margins, and P/E multiple, and calculates the stock’s expected returns.

Here’s what we used for TGT stock:

1. Revenue Growth: 1%

Target’s growth hinges on executing its three strategic priorities: merchandising authority, elevated experience, and technology enablement.

The company reported Q3 comparable sales down 2.7%, reflecting continued pressure in discretionary categories such as Home and Apparel.

However, Food & Beverage posted growth with beverages up nearly 7% as customers embraced trend-forward health and wellness products.

Management expects the transformation investments to accelerate growth over time.

The $5 billion CapEx plan includes new, larger-format stores that are exceeding initial sales expectations, expanded remodels bringing the latest store experience to more locations, and significant floor pad changes across key categories.

2. Operating margins: 4.6%

The company expanded gross margins by reducing inventory shrinkage and is expected to deliver an 80-90 basis-point full-year benefit.

The recent headquarters restructuring eliminated approximately 1,800 roles, generating $180 million in annualized savings.

Management emphasized this wasn’t just about cost-cutting but about removing complexity to enable faster decision-making and reinvesting in strategic priorities.

3. Exit P/E Multiple: 15.2x

The market currently values Target at 15x earnings. We assume the P/E will remain relatively flat at 15.2x over our forecast period.

Near-term uncertainty from consumer spending patterns and the investment phase weighs on the multiple.

However, Target’s differentiated positioning, strong brand loyalty, and comprehensive transformation plan should support current valuation levels as execution improves.

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What Happens If Things Go Better or Worse?

Retail transformations carry execution risk and depend on a recovery in consumer spending. Here’s how Target stock might perform under different scenarios through January 2028:

• Low Case: If revenue growth reaches only 1.9% annually with net income margins of 3.4%, investors still see a 15.5% total return (3.7% annually).
• Mid Case: With 2.1% growth and 3.6% margins, we expect a total return of 40.2% (8.9% annually).
• High Case: If Target’s transformation accelerates to 2.3% revenue growth while achieving 3.8% margins, total returns could reach 64.6% (13.4% annually).

See what analysts think about TGT stock right now (Free with TIKR) >>>

The range reflects execution of store transformations, success in recapturing discretionary spending, and the ability to leverage technology to improve efficiency and the customer experience.

How Much Upside Does Target Stock Have From Here?

With TIKR’s new Valuation Model tool, you can estimate a stock’s potential share price in under a minute.

All it takes is three simple inputs:

• Revenue Growth
• Operating Margins
• Exit P/E Multiple

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Disclaimer:

Please note that the articles on TIKR are not intended to serve as investment or financial advice from TIKR or our content team, nor are they recommendations to buy or sell any stocks. We create our content based on TIKR Terminal’s investment data and analysts’ estimates. Our analysis might not include recent company news or important updates. TIKR has no position in any stocks mentioned. Thank you for reading, and happy investing!