Target at a Crossroads: Can a Bold New Strategy Revive the Retailer?

The investment case for Target Corporation is facing a critical test. As long-time CEO Brian Cornell prepares to step down on February 1, 2026, the retail giant has unveiled an aggressive five-year turnaround plan. The deeply divided reaction from Wall Street analysts, however, highlights the central uncertainty: can massive capital investment reverse the company's downward trajectory?

Market sentiment is currently being pulled in opposite directions by conflicting analyst calls. On one side, Morgan Stanley has raised its price target to $125, viewing the current valuation as an opportunity. In stark contrast, Bernstein reaffirmed its Sell rating with a target of just $80, urging caution due to persistent structural headwinds.

At the heart of the debate is the strategic shift led by incoming CEO Michael Fiddelke. The company's blueprint involves investing $4 to $5 billion over the next five years with the aim of generating $15 billion in new revenue. For the 2026 fiscal year alone, capital expenditures are projected to rise by approximately 25%. These funds are earmarked for modernizing Target's supply chain and enhancing the in-store shopping experience.

This ambitious push follows a disappointing third quarter in 2025. In that period, revenue declined by 1.5% to $25.3 billion, with comparable store sales dropping 2.7%. A silver lining was notable operational discipline, as adjusted earnings per share of $1.78 surpassed the consensus estimate of $1.71.

Should investors sell immediately? Or is it worth buying Target?

The Structural Challenge Versus Value Argument

The analyst community is split on the plan's potential for success.

• The Bull Case: Morgan Stanley maintains an Overweight rating. Analyst Simeon Gutman argues the shares appear attractively valued, trading at a price-to-earnings ratio of about 10.3—a ten-year low—despite near-term challenges.
• The Bear Case: Bernstein's Sell rating, upheld by analyst Zhihan Ma, warns that the apparent "value" proposition may be a trap. The firm points to fundamental problems within the discretionary consumer goods segment, which forms the core of Target's business.

This skepticism is grounded in performance. Target's stock has fallen roughly 17% over the past twelve months and more than 42% over five years. Analysts attribute this to a "discretionary recession." Unlike competitor Walmart, which benefits from stable grocery sales, Target is heavily exposed to consumer spending on home furnishings, apparel, and electronics—categories where shoppers have become notably cautious.

A Pivotal Transition and Earnings Test

The immediate trial for the new strategy and leadership team is imminent. Michael Fiddelke officially assumes the CEO role on February 1. Shortly after, in early March, the company will release its fourth-quarter 2025 results. Market experts forecast revenue of $30.56 billion, which would represent a slight year-over-year decrease of 1.1%.

From a technical perspective, the stock has shown signs of short-term stabilization, trading above its key moving averages. However, the Relative Strength Index (RSI) is approaching overbought territory, suggesting potential for increased volatility as investors weigh the competing narratives of deep value against structural decline.