Target (TGT) Stock: Investors Reject New CEO Choice Despite Strong Earnings Beat. Here's Why

TLDR

Table of Contents

Target appointed COO Michael Fiddelke as new CEO, replacing Brian Cornell on February 1, 2026
Stock dropped 10% in premarket trading despite beating Q2 earnings expectations with $2.05 EPS vs $2.04 expected
Revenue fell 0.9% to $25.2 billion but exceeded analyst projections of $24.9 billion
Investors preferred external hire over 20-year company veteran for turnaround leadership
Same-store sales declined 1.9%, showing continued challenges despite earnings beat

Target stock plunged 10% in premarket trading Wednesday following the announcement of Michael Fiddelke as the retailer’s new CEO. The appointment overshadowed stronger-than-expected second-quarter earnings results.

Fiddelke, Target’s current chief operating officer, will replace CEO Brian Cornell on February 1, 2026. Cornell will transition to executive chair of Target’s board of directors.

The leadership change disappointed investors who hoped for an external hire to lead the company’s turnaround efforts. Target stock has dropped 22% this year through Tuesday’s close, underperforming the S&P 500’s 9% gain.

“We and the investment community preferred an external candidate to bring wholesale change to Target,” wrote Mizuho analyst David Bellinger. The premarket stock movement reflected this sentiment clearly.

Target’s board conducted a deliberate succession process that included external searches. Christine Leahy, lead independent director, said Fiddelke was chosen for his enterprise insight and team trust built over two decades.

Fiddelke’s Turnaround Plans

Fiddelke outlined three main priorities as incoming CEO. First, sprucing up merchandise to reclaim style and design leadership. Second, improving consistency of the in-store experience.

Third, investing in technology across operations to increase speed and efficiency. Fiddelke said these efforts are already underway through Target’s new Enterprise Acceleration Office, which he oversees.

Early results show promise, including double-digit growth in children’s home décor from new merchandise. “We need more of those examples across categories,” Fiddelke said on a call with reporters.

Target’s annual revenue has declined for two consecutive fiscal years. The company faces challenges from merchandise shortages, understaffing, and messy stores that have driven customers to competitors like Walmart and Costco.

Strong Q2 Results Amid Challenges

Target’s second-quarter earnings showed improvement despite ongoing headwinds. Sales dipped 0.9% year-over-year to $25.2 billion but topped analyst projections of $24.9 billion.

Target Corporation, $TGT, Q2-25 Results:
📊 Adj. EPS: $2.05 🔴
💰 Revenue: $25.2B 🟢
📈 Net Income: $935M
🔎 Digital sales grew 4.3%, while non-merchandise sales rose 14.2%, helping offset softness in in-store traffic and merchandise demand. pic.twitter.com/a23QgO4RBJ
— EarningsTime (@Earnings_Time) August 20, 2025

Adjusted earnings per share of $2.05 slightly beat Wall Street’s $2.04 estimate. The company noted higher markdowns and tariff costs pressured gross margins.

Disciplined cost management helped offset margin pressures, executives said. Target reiterated fiscal-year guidance expecting low-single digit sales decline.

Adjusted earnings per share are projected between $7 to $9. Consensus estimates call for roughly 1.5% sales drop and $7.28 adjusted earnings per share.

Same-store sales remained negative, declining 1.9%. This metric shows Target still faces fundamental challenges despite the earnings beat.

Bernstein analyst Zhihan Ma noted Target “is still not out of the woods.” The company must navigate macroeconomic challenges including higher tariffs and slowing consumer demand.
“It is likely hard for the market to get behind a turnaround led by a long tenured insider,” Ma added. She rates the stock Underperform.

Oppenheimer analyst Rupesh Parikh disagreed, calling Fiddelke “the right choice” despite market preference for outside hire. He rates Target stock Outperform.

Wall Street analysts set an average price target of $105.48 for Target stock. This includes projections ranging from $82.00 to $140.00.

The consensus recommendation from 38 brokerage firms stands at 2.8, indicating a “Hold” rating. GuruFocus estimates Target’s fair value at $147.51, suggesting 40% upside potential.

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