Target shares are moving higher this week, and the catalyst isn't a promotional blitz or a new merchandise line. Instead, one of Wall Street's major banks has concluded that the retail giant has genuinely turned a corner.

HSBC upgraded Target Corporation (NYSE: TGT) to Buy from Hold on Wednesday and lifted its price target to $190 from $125 — a revision of more than 50% that reflects growing conviction in the company's trajectory. Price targets represent an analyst's estimate of a stock's fair value over a typical twelve-month horizon, and revisions of this size from a major bank tend to refocus attention on the underlying business. The stock responded swiftly, advancing roughly 2% after the announcement to hover around $157.

The bullish call from HSBC analyst Joe Thomas lands with Target already in the midst of a standout 2026. Shares have rallied 63% year to date, including a 51% gain since Michael Fiddelke assumed the chief executive role in February. The run has made Target one of the year's standout performers among large U.S. retailers.

Traffic Growth Anchors the Recovery Thesis

Thomas pointed to a series of metrics from Target's recent results to support the upgrade. The company delivered a 3.8% increase in second-quarter comparable sales — a widely used retail benchmark that tracks performance at established locations — while store-originated sales expanded 2.7%. The retailer also exceeded consensus earnings-per-share estimates by approximately 5%.

In Thomas's view, the source of that growth matters more than the figures themselves. The expansion is being driven by an increase in customer visits rather than by elevated pricing or larger transaction sizes. That distinction is significant: it suggests consumers are genuinely returning to Target locations, rather than the company simply extracting more revenue from the shoppers it already has.

"This indicates to us that Target is rebuilding customer traffic and that its store base is not being materially cannibalized," Thomas wrote in his note.

The upgrade came one day after Target announced price reductions on approximately 2,000 products spanning home goods, apparel, and accessories, an initiative the retailer positioned as support for families entering the holiday shopping period. That announcement initially failed to inspire investor enthusiasm. Target shares declined 1.3% on Tuesday, while the broader S&P 500 remained essentially flat.

Thomas's research note did not directly address the latest price cuts, but they complement more than 10,000 reductions Target has implemented throughout the previous year.

A Turnaround Taking Shape

Fiddelke introduced a comprehensive turnaround initiative in March, centered on three pillars: modernizing product assortments, implementing strategic price reductions, and reimagining store experiences. Market participants have largely embraced the approach — the stock has appreciated 32% since the plan was unveiled.

Target also raised its full-year outlook for the second time this year alongside its August 19 earnings release. Management now projects fiscal 2026 earnings of $8.25 to $9.25 per share, up from the previous range of $7.50 to $8.50.

The recovery is not uniform across the business. Apparel and home goods categories continue to underperform relative to other divisions. Nonetheless, Thomas acknowledged encouraging developments in children's clothing and home merchandise, both priority areas within Target's refresh strategy.

Wall Street Remains More Reserved Than HSBC

The broader analyst community maintains a more cautious stance on the retailer. Among 43 analysts monitored by FactSet, the consensus rating remains at Hold, with only 28% recommending the shares as a Buy. The consensus price target stands at $165.96, suggesting approximately 7% of potential upside from current trading levels — a considerably more conservative outlook than HSBC's $190 projection, one that leaves HSBC among the more bullish voices covering the stock.

Target's upcoming earnings release will show whether the customer-traffic momentum underpinning Thomas's thesis can sustain itself through the crucial holiday shopping season, the most important stretch of the retail calendar. Alongside the traffic figures, category-level performance in apparel and home goods — the divisions still trailing the rest of the business — will provide a measure of how much ground the merchandise refresh has gained.

Source: Blockonomi