Uncertainty around President Donald Trump's tariffs and brewing recessionary fears may put pressure on Target in the near term, according to Goldman Sachs. The firm downgraded the retailer to neutral from buy and slashed its price target to $101 from $142. The updated target implies more than 9% upside from Tuesday's close. That reduced upside potential comes as the stock has already faced sizable declines this year, seeing a year-to-date loss of almost 32%. Shares have also slid more than 12% in the past month, coming on the heels of CEO Brian Cornell saying back in early March that the company will likely have to increase produce prices as a result of Trump's tariffs on Mexico. "Given uncertainty around tariffs and the inflation outlook appear to be taking a toll on consumer sentiment and expectations, we believe a recovery in growth for discretionary categories will be delayed versus our expectations heading into 2025," analyst Kate McShane wrote in a note on Wednesday. "In our view, while consumers may continue to shop around seasonal events, a decline in overall discretionary spending will continue to weigh on TGT's top line for the near term, with signs of a sales decline seen in 1Q-to-date Placer and HundredX data below," she added. While Trump has since issued a 90-day pause on his "reciprocal" tariff rates for most countries, inflation fears as a result of the tariffs have led consumer sentiment to plummet . McShane notes that Target's product mix in 2024 was about 53% discretionary, meaning the company could be more heavily impacted by a consumer spending pullback compared to its peers like Costco or Walmart . The analyst also sees more downside risk to earnings than upside as a result of the tariff risk. She estimates that for Target to break even on EBIT profitability, the retailer would have to increase prices by 1% to 11% if Selling, General, and Administrative costs were to stay the same. McShane's call joins most of Wall Street with a neutral stance. Among the 40 analysts covering the stock, 24 have a hold rating, according to LSEG data. Fifteen have a strong buy or buy rating. However, analysts call for massive upside from here, with a consensus target of nearly $129 calling for about 40% upside. In premarket trading Wednesday, the stock moved more than 1% lower following the downgrade. Get Your Ticket to Pro LIVE Join us at the New York Stock Exchange! Uncertain markets? Gain an edge with CNBC Pro LIVE , an exclusive, inaugural event at the historic New York Stock Exchange. In today's dynamic financial landscape, access to expert insights is paramount. As a CNBC Pro subscriber, we invite you to join us for our first exclusive, in-person CNBC Pro LIVE event at the iconic NYSE on Thursday, June 12. Join interactive Pro clinics led by our Pros Carter Worth, Dan Niles and Dan Ives, with a special edition of Pro Talks with Tom Lee. You'll also get the opportunity to network with CNBC experts, talent and other Pro subscribers during an exciting cocktail hour on the legendary trading floor. Tickets are limited!
