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Investing.com -- Morgan Stanley believes Target is showing early but tangible signs of a turnaround, with analysts now seeing “a path to a credible improvement story.”
In a note following meetings with management in Minneapolis, analyst Simeon Gutman reiterated an Overweight rating and a $145 price target, saying “TGT is moving in the right direction.”
According to Morgan Stanley, the reinvigoration effort is still in its early stages but is gaining traction.
The report highlights that Target’s turnaround “starts with winning back guests/foot traffic, which takes time, but is happening.”
Improvements in store layouts, upgrades in key categories, and better merchandising are expected to help push traffic back into positive territory.
Meanwhile, the bank says near-term growth should come from Food & Beverage, Beauty and Hardlines, with Home Furnishings & Decor contributing in late 2026.
Gutman also notes that the company appears increasingly capable of balancing better store execution and newness. After walking through Target’s self-funding plan, he writes that the team is “more comfortable that both can happen,” citing improvements in productivity savings and more disciplined reinvestment in labor and fulfillment.
Financially, Morgan Stanley argues that 2026 expectations look achievable, saying the company’s EBIT margin guidance feels conservative. The firm also flags lower-income household spending as a risk but says Target can likely offset the pressure if other income tiers remain resilient.
Overall, Gutman sees a wide and positive risk/reward skew, with the $145 price target implying 21% upside.