Already near a three-year low, Target shares have been hit with a series of downgrades as consumer pushback on the retailer’s Pride merchandise continues.
Target’s stock value has fallen roughly 3.1% in the last five days, after plummeting around 18.5% the last month.
The company’s latest snub from Citi analyst Paul Lejuez lowers the stock to neutral from buy and pits the troubled retailer against rival Walmart, which Lejuez said in a note on Friday would begin gobbling up market share.
A Walmart in Atlanta on Feb. 19, 2023. (Photographer: Dustin Chambers/Bloomberg via Getty Images / Getty Images)
Considering the competitive landscape, "We believe Walmart is likely to continue gaining market share, and Target's high exposure to discretionary sales will not serve them well in the current macro backdrop," Lejuez said in the note.
"Despite the recent stock pressure, we cannot recommend investors buy the stock given these dynamics and now believe the risk, reward is more balanced, but risk is more to the downside near term," he continued.
Lejuez also highlighted Target's 13.9% drop in store traffic the final week in May as inflationary pressures subdued consumer spending over Memorial Day weekend.
A Target employee pulls red shopping carts into the Santa Fe, New Mexico, store. Santa Fe’s Target is constructed in the Southwest Pueblo architectural style. (iStock / iStock)
On Monday, KeyBanc Capital Markets cut the retailer's shares to "sector weight" from "overweight" as the resumption of student loan payments stipulated by Congress' debt ceiling agreement poses a sizable headwind for discretionary spending for shoppers, which has an elevated discretionary sales mix and a younger, college-educated core consumer demographic.
Last week, JPMorgan Chase also downgraded Target's stock, with analysts citing the possibility of a decline in sales due to consumers pulling back spending amid persistent inflation.