Key Takeaways:
- Target stock could reach $127 per share by January 2028, based on valuation assumptions.
- This implies a 30% total return from today’s price of $98, with a 13% annualized return over 2.1 years.
- The retail giant is undergoing a major transformation, with a $1 billion increase in CapEx for store remodels and technology upgrades.
Now Live: Discover how much upside your favorite stocks could have using TIKR’s new Valuation Model (It’s free)>>>
Target (TGT) is accelerating its turnaround strategy through major store transformations and technology investments. The company plans to increase capital expenditures by $1 billion in fiscal 2026 to fund the most significant store changes in a decade.
The retail giant reported third-quarter comparable sales down 2.7%. Digital sales grew 2.4%, driven by same-day delivery growth exceeding 35%. Despite top-line challenges, Target maintained disciplined execution with adjusted earnings of $1.78 per share.
CEO Michael Fiddelke emphasized three priorities: solidifying design-led merchandising authority, elevating guest experience, and accelerating technology deployment.
TGT stock is down over 60% from its all-time high and has grossly underperformed the broader markets in recent years.
Here’s why Target stock could deliver solid returns through 2028 as it executes store transformations and rebuilds its merchandising authority.
See analysts’ full growth forecasts and estimates for Target stock (It’s free) >>>
What the Model Says for Target Stock
We analyzed Target stock using valuation assumptions based on its store transformation plans, technology acceleration across merchandising and fulfillment, and efforts to rebuild performance in discretionary categories.
Based on estimates of 1% annual revenue growth, 5% operating margins, and a normalized P/E multiple of 13x, the model projects Target stock could rise from $98 to $127 per share.
That would be a 30% total return, or a 13% annualized return over 2.1 years.
Our Valuation Assumptions
Estimate a company’s fair value instantly (Free with TIKR) >>>
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 Target stock:
1. Revenue Growth: 1%
Target posted flat August and October results, with September down 4%. The company also expects low single-digit declines in comparable sales in Q4.
Fun 101 delivered growth with toys up nearly 10% in Q3. Sporting equipment and trading cards saw double-digit increases where Target invested in trend-right assortments. The company launched 20,000 new holiday items this year, twice last year’s total.
Target is making significant floor pad changes across the Home, Baby, and Ulta Beauty segments after that contract ends in August 2026. Management described this as the most considerable store transformation in a decade.
We used a 1% forecast, reflecting stabilization through merchandise transformation balanced against near-term discretionary headwinds.
2. Operating margins: 5%
Target achieved adjusted EBITDA margins of around 35%. The company is deploying AI across operations, with nearly 80% of managed leads handled by AI, enabling a 40% reduction in outsourced teams.
Management expects to leverage $180 million in annualized savings from restructuring to invest in strategic priorities. The transformation eliminated 1,800 headquarters roles to add decision-making speed.
Target is optimizing fulfillment through market-based strategies. High-volume stores reduce brown box shipping to focus on guests, while lower-volume locations become shipping specialists.
We forecast 5% operating margins, reflecting efficiency gains through AI deployment balanced against continued transformation investment.
3. Exit P/E Multiple: 13x
Target stock trades at a P/E multiple of 12.7x, below historical averages, reflecting near-term growth challenges. The company maintained its dividend through 50+ consecutive years of increases.
We maintain a 13x exit multiple given Target’s brand strength, expanding physical footprint, and improving operational capabilities.
Management deployed $150 million to repurchase shares in Q3, demonstrating confidence in cash generation and shareholder value creation.
Build your own Valuation Model to value any stock (It’s free!) >>>
What Happens If Things Go Better or Worse?
Different scenarios for TGT stock through 2028 show varied outcomes: (these are estimates, not guaranteed returns):
- Low Case: Store transformations disappoint, and consumer spending stays weak → 8% annual returns
- Mid Case: Experience improvements and Fun 101 expansion drive market share gains → 13% annual returns
- High Case: Full turnaround with discretionary recovery and technology advantages → 18% annual returns
Even in the conservative case, Target stock offers positive returns, supported by strong brand equity, improved efficiency, and disciplined capital allocation, with consistent dividend growth.
See what analysts think about TGT stock right now (Free with TIKR) >>>
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
If you’re not sure what to enter, TIKR automatically fills in each input using analysts’ consensus estimates, giving you a quick, reliable starting point.
From there, TIKR calculates the potential share price and total returns under Bull, Base, and Bear scenarios so you can quickly see whether a stock looks undervalued or overvalued.
See a stock’s true value in under 60 seconds (Free with TIKR) >>>
Looking for New Opportunities?
- See what stocks billionaire investors are buying so you can follow the smart money.
- Analyze stocks in as little as 5 minutes with TIKR’s all-in-one, easy-to-use platform.
- The more rocks you overturn… the more opportunities you’ll uncover. Search 100K+ global stocks, global top investor holdings, and more with TIKR.
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!
