Target's Comparable Sales Strength May Not Be Sustainable Into 2027, BofA Says

01:16 PM EST, 11/09/2026 (MT Newswires) -- Target (TGT) is expected to see strong comparable sales growth in its fiscal third quarter, though the strength might not be sustainable into next year amid tougher comparisons, BofA Securities said Monday. The brokerage raised its third-quarter comparable sales growth forecast for the retailer to 4% from 3% amid continued strength in categories that have supported performance this year, particularly beauty and collectibles. The FactSet-polled consensus calls for same-store sales growth of 3.4%. BofA lowered its earnings estimate for the quarter by $0.09 to $2.08 a share, reflecting expectations for a lower gross margin and higher selling, general and administrative expenses. Wall Street expects GAAP EPS of $2.04 and adjusted EPS of $2.06. However, the brokerage is cautious on comparable sales growth momentum ahead. "(Target) has delivered an impressive improvement in sales this year, but we remain wary about the pace of EPS revisions and sustainability of strong comp trends heading into 2027," BofA analyst Christopher Nardone said in a note to clients. "We see risk that the stock will begin entering crossroads of decelerating sales trends, worsening industry margin dynamics, and limited SG&A flexibility versus others in our coverage given the company's need to lean into this investment cycle to drive sustainable comps," Nardone said. BofA reiterated its underperform rating on the Target stock while raising its price objective to $141 from $140. The near-term debate on the stock will likely continue to be around valuation and whether there is any upside risk to 2027 consensus EPS of $9.65, the brokerage said. "Any signs that the early holiday selling season is off to a strong start would likely help support valuation levels in the near term," Nardone said. Target shares were up 4.6% in Monday afternoon trade, taking the stock's year-to-date gain to nearly 70%. The company is scheduled to report third-quarter results Nov. 18. Last week, Oppenheimer said the retailer's results are likely to at least meet the Street's estimates amid healthy consumer spending, though investors remain skeptical about the company's ability to lap difficult comparisons in 2027. Separately, Truist Securities said it expected the company to issue a cautious fiscal fourth-quarter outlook amid decelerating sales trends. Among Target's major rivals, Walmart (WMT) is scheduled to report its fiscal third-quarter results Nov. 19, while Costco Wholesale (COST) is set to release its fiscal first-quarter earnings Dec. 10. Price: 164.98, Change: +6.57, Percent Change: +4.15