Target stock tumbles 5% as Wall Street questions turnaround rally

Target TGT shares fell more than 5% on Monday, marking the retailer’s sharpest one-day percentage decline since August, as investors reassessed the company’s turnaround prospects ahead of its upcoming earnings report.

The stock’s decline extended a three-day losing streak during which shares have dropped nearly 9%, representing the company’s worst three-day stretch in more than a year.

The selloff comes despite Target outperforming many major retailers and the broader market earlier this year.

Shares remain up more than 20% year-to-date, though investors now appear increasingly cautious about whether the rally has moved too far ahead of the company’s underlying fundamentals.

Concerns emerge over turnaround strategy

Investor sentiment weakened following a report published Monday by The Washington Post questioning whether Target Chief Executive Officer Michael Fiddelke can restore the retailer’s previous momentum.

The article cited skepticism among analysts and strategists about the challenges facing the company, particularly because Fiddelke is a longtime Target executive rather than an outside hire brought in to reshape the business.

After several years of operational struggles, including disappointing sales trends, declining store traffic, and customer complaints about store conditions and product selection, some investors appear uncertain about the company’s ability to execute a sustained turnaround.

Target shares have lost roughly half their value since reaching highs in late 2021.

The latest weakness also coincided with a cautious note from Barclays analyst Seth Sigman, who reiterated an Underweight rating on the stock alongside a $115 price target, below Target’s recent trading level of approximately $118.60.

Sigman acknowledged recent operational improvements but questioned whether the company could deliver sustained long-term growth beyond its initial recovery phase.

“Overall, our key take is that we feel better about Target getting back to the baseline after the sales/margin reset in 2025…but less clear on how that grows, which seems key to the multiple from here.”

Earnings report adds pressure

Investors are also preparing for Target’s first-quarter earnings report scheduled for May 20, which could provide additional clarity on the retailer’s recovery efforts.

Wall Street currently expects Target to report quarterly earnings per share of $1.39, representing growth of more than 6% compared with the prior year period.

Analysts also expect full-year earnings to rise approximately 6% to $6.03 per share.

According to Barclays analysts, Target’s recent operational improvement has occurred faster than expected, supported by easier year-over-year comparisons, internal company changes, and stronger consumer spending trends linked to tax refunds.

The analysts said sales appeared to improve during the latest quarter, with gains spread across multiple consumer groups.

However, they also highlighted ongoing competitive pressures within the retail sector.

Walmart and Amazon remain competitive threats

Barclays noted that while Target’s sales trends may be stabilizing, the company could still be losing market share to larger rivals such as Walmart and Amazon.

The firm’s analysis using Barclays card data suggested that some shoppers continue shifting spending toward those competitors despite Target’s recent efforts to improve operations.

Some investors may also be concerned that rising gasoline prices could reduce discretionary consumer spending, potentially affecting retailer performance in the coming quarters.

For now, Wall Street appears divided on whether Target’s recent gains represent the early stages of a durable turnaround or simply a temporary rebound following a difficult period for the retailer.