Bank of America Analyst Downgrades Target to Sell Ahead of Q2 Results

Bank of America Securities analyst Robert Ohmes has downgraded Target's (TGT) rating to Sell from Hold and cut the price target to $93 from $105 ahead of its Q2 results. Ohmes cited concerns over Target's long-term sales, profitability outlook, and competitive scenario. Target's stock was down about 2% on Friday. The revised price target is based on a 12x multiple of the analyst's updated Fiscal 2027 adjusted EPS estimate of $7.75.

Bank of America Securities analyst Robert Ohmes has downgraded Target's (TGT) rating to Sell from Hold, slashing the price target to $93 from $105 ahead of its Q2 results. The downgrade reflects growing concerns over the retailer's long-term sales, profitability outlook, and competitive scenario. The stock was down about 2% on Friday following the announcement.

The revised price target is based on a 12x multiple of the analyst's updated Fiscal 2027 adjusted EPS estimate of $7.75. Ohmes cited several key risks that could weigh on Target's long-term performance. He noted that the company is grappling with slowing digital sales growth, which may limit its ability to adapt to shifting consumer behaviors. Additionally, Target lacks scale in digital advertising and third-party marketplace operations, areas where rivals like Amazon (AMZN) and Walmart (WMT) have already built momentum.

Ohmes also highlighted tariff-related costs, pricing pressures, and merchandising challenges as potential margin threats. Target's higher import exposure—around 50% of its cost of goods sold compared to Walmart's 33%—means it would need to raise prices by around 8% on average to fully offset the impact of tariffs, compared to Walmart's 4% to 5% increase.

The downgrade comes ahead of Target's second-quarter report on August 20. Wall Street analysts expect the company to report earnings of $2.02 in Q2 2025, compared to $2.57 in the prior-year quarter. However, the company's revenue for Q2 is expected to decline by about 2% year-over-year to $24.94 billion.

Target's stock has a Hold consensus rating based on 11 Buys, 17 Holds, and four Sells assigned in the last three months. At $103.40, the average TGT stock price target implies a 1% upside potential.

References:
[1] https://www.tipranks.com/news/target-tgt-slips-after-top-bofa-analyst-downgrades-stock-to-sell-ahead-of-q2-results
[2] https://www.cnbc.com/2025/08/15/bank-of-america-downgrades-target-to-sell-says-long-term-outlook-is-faltering.html