JPMorgan thinks Target may be in for turbulent times ahead. The bank downgraded the retail giant to neutral from overweight on Thursday, with a $144 price target down from $182. The firm’s new forecast implies about 10% upside for Target stock from Wednesday’s $130.93 per share close. JPMorgan outlined four key reasons for the downgrade: a weakening consumer, grocery disinflation, loss of market share and an overexposure to millennial customers subject to a resumption in student loan payments. “Today, we believe TGT sits at the center of a number of consumer headwinds,” JPMorgan analyst Christopher Horvers said. “With 51% of its sales derived from discretionary categories (apparel, hardlines, and home), 49% derived from more consumable categories (which are facing disinflation), accelerating share of wallet reversion occurring, and student loans potentially coming due, we see the risk of downward earnings revisions rising.” Horvers said the bank is also lowering expectations for forward guidance into 2024, and now expects full-year earnings of $9.90 per share next year down from a previous forecast of $10.37. Shares of Target have slipped 12.1% in 2023. Last month, the company said fiscal first-quarter sales barely grew from the year-earlier period. Target added that it sees sluggish sales growth for the current quarter. TGT YTD mountain Target stock has been under pressure this year with a 12.2% fall. — CNBC’s Michael Bloom contributed to this report.
