Target Q3 Earnings Preview: Growth Recovery Expectations Remain Low. Is It Time to Buy?

TradingKey - U.S. retail giant Target (TGT) is grappling with shifting consumer habits and trade policy changes as it prepares to release its third-quarter 2025 earnings before the market open on Wednesday, November 19.

The company, which primarily sells discretionary items, is striving to return to a growth trajectory. Analysts suggest it might be time to consider buying Target shares, even as the retailer's revenue could mark its fourth consecutive quarterly decline.

According to Seeking Alpha, analysts project Target's third-quarter revenue to fall to $25.29 billion from $25.67 billion in the same period last year, marking a 1.48% year-over-year decrease. Earnings per share (EPS) are expected to decline 7.57% year-over-year, from $1.85 to $1.71.

This forecast implies that Target has yet to escape its revenue slump, following year-over-year declines in sales for the past three consecutive quarters. Over the last eight quarters, Target's performance relative to analyst consensus has been mixed, with revenue falling year-over-year in five periods and EPS missing market expectations three times.

Target Annual Revenue, Source: TradingKey

Even before this year's announcement of Trump tariff policies, Target was already contracting due to shifts in consumer behavior. Persistent high inflation over the past two years has eroded consumer purchasing power, making Target's business, which primarily sells non-essential items like beauty products and and apparel, particularly vulnerable.

Target investors note that when wallets tighten, American consumers simply aren't spending as much on the retailer's products.

While indicators such as U.S. GDP and non-farm payrolls continue to underscore "the resilience of the American economy," consumer activity is deteriorating. The University of Michigan's Consumer Sentiment Index for November, for instance, fell to its lowest level in three years.

Despite also facing tariff cost pressures, Walmart, which focuses on mass-market goods and relies less on overseas supply chains, has achieved record revenue and stock performance. Furthermore, investor confidence in Target's stock has been eroded by management's inventory missteps and disorganized store operations.

Year-to-date, Target's stock has plunged approximately 35%, while Walmart's shares have gained 14%, and Costco's has remained largely flat.

During its second-quarter earnings release, Target announced a leadership change, with current Chief Operating Officer Michael Fiddelke set to take over as CEO in February next year. Subsequent stock performance suggests investors harbor little confidence in the incoming CEO.

Fiddelke, who has pledged to improve in-store and online merchandising and customer experience, has already implemented measures aimed at restoring growth. These include initiating the company's first major layoffs in a decade and announcing price reductions on over 3,000 food and household items.

Mizuho analysts note that Target continues to lose market share and anticipate weak comparable sales for the third quarter. However, they suggest Target's stock could remain competitive given its current undervaluation—trading at 12 times forward earnings, a 25% discount to its 10-year average, and significantly lower than Walmart's 35 times.

Jefferies analysts argue that Fiddelke's appointment as CEO is an "underappreciated catalyst". This leadership change could potentially help Target narrow its price gap with competitors, increase store foot traffic, and strengthen its private-label business, which accounts for one-third of its revenue.

The Alpha Analyst believes that despite ongoing operational challenges, historical trends suggest limited further downside for Target's stock, recommending an investment strategy focused on a "stable income + option-like upside potential" combination.

Target uniquely combines income security with flexible growth, supported by a solid dividend payout, a healthy free cash flow yield, and structural digital initiatives poised to fuel long-term stock appreciation.

According to TradingKey's stock score tool, Wall Street analysts have assigned Target an average target price of $102.886, implying approximately 16% upside potential from its current price of $88.48.