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Bear of the Day: Target (TGT)

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At a time when discount retailers have emerged as market leaders, Target ((TGT - Free Report) ) has unfortunately become a notable underperformer. While peers like Walmart and Costco continue to thrive, Target has struggled with stagnant sales, margin pressure, and shifting consumer preferences. These headwinds have weighed heavily on the stock, which is now down roughly 30% year to date and has shown virtually no net return over the past decade.

Adding to the bearish outlook, Target currently holds a Zacks Rank #5 (Strong Sell), reflecting negative earnings estimate revisions and declining analyst sentiment. Technically, the stock has also broken down from a key support level, confirming a bearish pattern that suggests further downside may be ahead.

To be clear, Target remains a well-known and widely trusted brand, with long-term potential to rebound. But for now, with both fundamentals and technicals working against it, investors would be wise to stay on the sidelines until signs of a meaningful turnaround in both in earnings momentum and share price behavior begin to emerge.

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Target Stock Falls as Analysts Lower Estimates

The fundamental picture for Target has continued to deteriorate, with analysts sharply lowering their earnings expectations in recent weeks. Current-year EPS estimates have been revised down by 10.9%, while next year’s projections have fallen even further, by 12.2%. These widespread downward revisions reflect weakening confidence in the company’s near-term outlook and reinforce its Zacks Rank #5 (Strong Sell).

Target's top-line growth has also been underwhelming. Sales have remained essentially flat over the past three years, and the outlook going forward is hardly inspiring. Revenues are expected to decline by 1.2% in the coming year before rebounding modestly by just 2.6% the year after—a tepid pace that suggests continued pressure from shifting consumer behavior and growing competition from both value-oriented and e-commerce retailers.

Zacks Investment Research
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TGT Stock Breaks Down

After spending nearly two months consolidating in a tight range, TGT stock broke down below key support this week, signaling renewed technical weakness.

Interestingly, the initial move lower did not trigger immediate follow-through selling—often a hallmark of stronger breakdowns. This could be a mildly encouraging sign that the selloff may be losing momentum, or that the stock is searching for a new equilibrium.

Still, from a technical standpoint, the trend remains bearish. As long as TGT trades below the $95.60 level, the breakdown is considered valid and the path of least resistance continues to point lower. Without a sustained move back above that former support, now likely acting as resistance, investors should be cautious of further downside pressure.

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Image Source: TradingView

Should Investors Avoid TGT Stock?

Given the combination of weakening fundamentals, downward earnings revisions, and a bearish technical setup, Target appears to be in a sustained downtrend. While the brand’s long-term potential shouldn’t be dismissed, the near-term risks outweigh the rewards. Until Target shows clear signs of stabilizing both its earnings outlook and stock price, investors are better off looking elsewhere.


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