Target stock is on fire — but a big test lurks

Target stock is on fire — but a big test lurks Brian Sozzi · Executive Editor Mon, August 17, 2026 at 3:48 PM GMT+2 2 min read TGT The bulls have returned to Target's ( TGT ) stock in a big way this year on hopes for a turnaround under new CEO Michael Fiddelke. That upbeat thesis — which has powered shares up 59% this year — is about to be put to the test later this week when the company reports second quarter earnings. But even if Target delivers on the quarter and raises its full-year profit guidance as expected, it may not be enough to keep the stock price charging higher.

"Investor expectations are very elevated into Target's second quarter print, but we believe the more important debate is whether improving store and merchandising execution supports confidence in growth durability in FY27 and beyond," Deutsche Bank analyst Krisztina Katai said. Target is expected to post a second quarter comparable sales increase of 2. 3% and earnings of $2.

29. Comparable sales fell 1. 5% in last year's second quarter amid a host of merchandising execution issues.

Earnings came in at $2. 05. Since the start of 2026, however, Target has moved quickly to rewrite its merchandising wrongs.

It has expanded wellness offerings, added 3,000 beauty products across 60 new brands, reset 75% of home decorative accessories, accelerated food and beverage innovation, and introduced a back-to-school assortment that is more than 50% new, Jefferies analyst Corey Tarlowe pointed out. Tarlowe said this represents one of the broadest assortment refreshes in years and is beginning to translate into improved traffic trends. The longtime Target bull thinks the market may be underestimating the durability of the traffic benefits from the big box retailer's "merchandising reset.

" This underestimation was seen in Target's first quarter earnings report card: The retailer delivered a $0. 28 earnings beat. Sales increased in all merchandise departments, led by beauty, hardlines, and food.

Store traffic increased. The company even jacked up its full-year sales outlook and said it expects sales to increase in each quarter of the year. "With shares up 59% year to date we think much of the turnaround progress is reflected in the stock, and believe the stock is increasingly trading on confidence in Target's ability to deliver $10 plus of EPS in fiscal year 2027, making the durability of recent traffic and sales gains the most important takeaway from the quarter," Katai added.

"For our part, we remain sidelined until there is greater evidence that recent same-store sales momentum reflects sustainable market share gains and improved competitive positioning, rather than cycling easier comparisons. " Story Continues Brian Sozzi is Yahoo Finance's Executive Editor, host of the Power Players with Brian Sozzi podcast, and a member of Yahoo Finance's editorial leadership team. Follow Sozzi on X @BrianSozzi , Instagram , and LinkedIn .

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