JPMorgan Chase, the largest bank in the United States, has made the decision to downgrade Target’s stock, reflecting a change in sentiment toward the retail giant.
The financial analysts at JPMorgan previously regarded Target’s stock as “overweight,” indicating their belief that it was a strong buy with potential for valuable returns.
However, they have now revised their rating to “neutral,” signifying that the stock is neither particularly favorable nor unfavorable.
Christopher Horvers, an analyst at JPMorgan, attributed the stock downgrade to recent market shifts and “company controversies.”
In his assessment, Horvers stated, “We continue to believe that the consumer is broadly weakening while the share of wallet shift away from goods (51% of [Target’s] sales) is ongoing.”
He further elaborated, “While still positive on a [three-year] basis, [Target] has been giving back share on a [one-year] view and we believe this share loss could accelerate into back to school and linger into holiday given consumer pressures and recent company controversies.”
According to Market Watch, Horvers expressed concern that these factors could potentially lead to a negative impact on Target’s foot traffic, which had previously experienced a run of 12 consecutive positive quarters.
Target faced backlash recently due to a range of controversial products, including LGBTQ onesies, “tuck-friendly” bathing suits, drag queen books for children, and clothing promoting satanism.
Responding to the criticism, Target removed some of these products from its shelves and relocated others to the rear of stores.
The backlash had a noticeable impact on Target’s stock, which saw a downward trend for almost two weeks.
Observers drew comparisons to the fate of Bud Light, fearing that Target would face a similar situation.
However, on Thursday, Target managed to break the streak of consecutive losing days on Wall Street.
Despite this temporary respite, Target’s stock has experienced a 12% decline in 2023, while the broader S&P 500 index has shown healthy gains.
