Target Catches Another Downgrade. These Stores Are Better Positioned.

Inventory issues, skimpy staff, messy stores, and an underwhelming turnaround strategy have turned off both investors and consumers. (Justin Sullivan/Getty Images)

Another analyst has soured on Target stock.

Barclays analyst Seth Sigman downgraded Target shares to Underweight from Equal Weight on Monday, arguing that the stock’s latest losing streak accurately represents the strained nature of the business. He maintained a $91 price target.

Target’s annual revenue has declined for two straight fiscal years, and sales fell 2.8% in the latest quarter. Earnings have also been squeezed, falling to $8.86 in the latest fiscal year from $8.94 the prior year. Barron’s previously wrote about Target’s pains, noting that a combination of inventory issues, skimpy staff, messy stores, and an underwhelming turnaround strategy has turned off both investors and consumers—a sentiment echoed by Sigman Monday.

“We see value in the TGT model, but absent a bigger strategic shift, we believe sales will continue to underperform,” he wrote.

Sigman notes that Target has several things working against it. For one, consumer demand for discretionary purchases—Target’s bread and butter—is still weak. If tariffs were to reignite inflation, that demand would wane further, he added, curbing Target’s sales growth.

He also cites third-party data that suggests demand trends are weakest among Target’s more frequent shoppers. The company has been losing market share for the better part of the past three years or so, as Barron’s reported earlier, as former Target loyalists defect to competitors such as Costco Wholesale or Walmart . Indeed, Sigman, who also covers Walmart, believes the retail giant’s market-share gains will accelerate this year as the company uses its scale to roll back prices across the board, undercutting competitors.

Few retailers can afford to keep prices as low as Walmart does, including Target. Raising prices could help Target’s profit margins in the short term, but it may contribute to more losses in market share. Sigman is forecasting that Target’s profit margins will improve in the second half of the year, but higher competition will curb how much they can increase in the long run. Of the two big-box retailers, Sigman prefers Walmart, which he rates Overweight.

“WMT tops our staples retail list, due to continued share gains (which may be accelerating), ramping digital and delivery, alternative profit upside and optionality on gen merch,” he wrote.

Target shares were down 0.4% Monday, extending its 24% year-to-date decline. Walmart was 1.3% higher, while the benchmark S&P 500 was gaining 0.5%.

A whopping 95% of analysts that cover Walmart stock rate it a Buy and just 2% a Sell; meanwhile, about 25% of Target analysts have a Buy rating on the shares, and 10% rate it a Sell.

A Target spokesman didn’t immediately answer Barron’s request for comment.

Sigman also upgraded Dollar Tree stock on Monday to Overweight from Equal Weight, and raised his price target to $120 from $95 previously.

While Target’s growth story is murkier, Dollar Tree’s has gotten cleaner after the company sold off its Family Dollar division earlier this year, he wrote. The company, like other value-based retailers, will likely benefit from consumers trading down to cheaper alternatives in face of tariff-related price increases.

Management-led initiatives are also resonating among consumers, he added, such as instituting multiple price points for various items.

Dollar Tree stock was up 2.1% Monday morning and has gained 50% in 2025.

Write to Sabrina Escobar at sabrina.escobar@barrons.com