Morgan Stanley: Short-term uncertainty still exists, but Target Corporation (TGT.US) has limited downside potential.

Morgan Stanley released a research report, giving Target Corporation (TGT.US) a "hold" rating with a target price of $112. Morgan Stanley believes that short-term uncertainties will impact the development of Target Corporation. Despite a strong overall performance in the second quarter of 2025, the appointment of an internal CEO may raise doubts about the stability of Target Corporation's earnings base, as the market generally believes that the company needs potential strategic and financial transformation. Although Morgan Stanley has anticipated internal candidate Michael Fiddelke is likely to succeed Brian Cornell as CEO, there is disagreement among investors about whether Target Corporation will appoint an external candidate. Despite Fiddelke being appointed as the head of Target Corporation's newly established Corporate Acceleration Office, the market may view this personnel change as a signal of relatively stable core strategic for the company. However, Morgan Stanley believes that despite low visibility of prospects, the downside of Target Corporation's stock is relatively limited. Firstly, the company's business is gradually stabilizing, with the lower limit of the current fiscal year's earnings guidance range of $7.00 per share, constituting a theoretical profit floor. Secondly, even if Fiddelke chooses to reinvest, Morgan Stanley believes that Target Corporation's earnings per share will not be lower than $6.00. Thirdly, the real estate value (estimated at least $30 billion) provides a certain degree of support for downside risks. Regarding transformation controversies, Morgan Stanley believes that the market hopes to hear from Fiddelke about measures for change, including supply chain optimization, marketing improvements, and product value enhancement. Establishing credibility through decisively changing current strategies will be a key task for the newly appointed CEO. As of Wednesday's closing of the US stock market, Target Corporation fell by 6.33% to $98.69. The stock has fallen by 25% year-to-date.