Target's Stock Downside Limited Despite Uncertainty, Says Morgan Stanley

Despite the current market uncertainty, Morgan Stanley has maintained a bullish outlook on Target Corporation (TGT.US), suggesting that the stock's downside potential is limited. The company's business is gradually stabilizing, with the lower end of its earnings per share guidance for the current fiscal year set at 7.00 dollars. This provides a theoretical earnings floor for the company, which could help mitigate further declines in its stock price.

Morgan Stanley has assigned a "buy" rating to Target Corporation, with a target price of 112 dollars. The firm acknowledges that short-term uncertainties could impact the company's development. While the second quarter of 2025 saw overall good performance, the appointment of an internal chief executive officer has raised questions about the stability of the company's earnings base. The market generally believes that the company needs to undergo potential strategic and financial transformations.

Although the market had anticipated that Michael Fiddelke would likely succeed Brian Cornell as the chief executive officer, there is a divide among investors regarding whether the company will appoint an external candidate. Despite Fiddelke being appointed to lead the newly established enterprise acceleration office, the market may view this personnel change as a signal that the company's core strategy will remain relatively stable.

However, Morgan Stanley believes that despite the low visibility of the outlook, the downside risk for Target Corporation's stock is relatively limited. Firstly, the company's business is gradually stabilizing. Secondly, even if Fiddelke chooses to reinvest, Morgan Stanley believes that Target Corporation's earnings per share will not fall below 6.00 dollars. Thirdly, the real estate value, estimated to be at least 30 billion dollars, provides a certain degree of support against downside risks.

Regarding the controversy surrounding the change, Morgan Stanley believes that the market expects Fiddelke to announce measures related to the change, including supply chain optimization, improved marketing methods, and enhanced product value. Establishing credibility through decisive changes in current strategies will be a key task for the newly appointed chief executive officer.