Here in 2025, s of Target (TGT 2. 28%) have hit five-year lows. Sales are slumping.
At the same time, And on top of that, global trade uncertainties can potentially squeeze the company's fit margins, in today's financial world.
For these reasons and more, investors are eager to head for the exit. But where will Target be in 2028. That's a question worth exploring.
Moreover, Whereas many top stock analysts focus only on the present quarter or year, everyday investors can make money by extending their view farther out, in this volatile climate.
Furthermore, And looking three years out is a good place to start. Image source: Target. What Target is doing right now In the first quarter of 2025, Target generated net sales of $23.
8 billion, a result of a disheartening same-store-sales decline of nearly 4%. A decline is expected on a full-year basis as well (something worth watching).
Nevertheless, On one hand, it makes sense to be disheartened with these top-line numbers (something worth watching). Moreover, After all, lower sales usually hurt fits, which is the case here.
For 2025, management expects earnings per (EPS) of $10 in a best-case scenario. For perspective, Target had EPS of over $14 just a few years ago.
On the other hand, even with a sales slump, Target should generate around $100 billion in net sales in 2025, in this volatile climate.
Net sales of this magnitude suggest that it's still a top-of-mind brand for consumers, and that's hugely important when considering the company's future opportunity.
Target is a brick-and-mortar chain that's building a digital. And being in the forefront of consumers' minds helps tremendously.
There are multiple components here, but the two that I want to talk are Roundel and Target Plus.
First, Roundel is Target's nascent retail media : the union of retail and digital advertising (quite telling). The company is able to package its robust consumer data set to advertisers.
Additionally, Sometimes it generates advertising revenue directly, and other times brands lower their prices to mote their ducts (something worth watching).
Moreover, But overall, this is already a $2 billion for the company, and this revenue enjoys better fit margins. Wise, Target Plus also has the potential to help fit margins.
The company allows third parties to sell on its e-commerce marketplace, just its major rivals.
On the other hand, As a reminder, e-commerce platforms do this for a simple reason: It's more fitable, in light of current trends.
Whereas selling first-party merchandise usually is a low-margin position, facilitating third-party sales and taking a cut can be quite lucrative at scale.
However, Where will Target be in 2028, considering recent developments.
At the same time, On the surface, Target seems a low-growth opportunity with a modest 4% fit margin -- it hardly seems attractive.
But I believe the next few years will be better than what many analysts anticipate. For starters, Roundel is expected to go from a $2 billion to a $4 billion by 2029.
However, And Target Plus is expected to facilitate $5 billion gross merchandise value by 2029.
Assuming it has a 15% to 20% take rate (not unheard of), this would be a $750 million to $1 billion for Target.
However, In other words, considering its 2029 targets for Roundel and Target Plus, the company has a path to adding around $2 billion to $2. Meanwhile, 5 billion in revenue by 2028.
Some may be unimpressed by this possibility (something worth watching). However, At the same time, After all, Target is a $100 billion ; adding $2 billion is only a 2% boost.
On the other hand, That's true. But investors would do well to remember that this boost wouldn't come from low-margin merchandise.
Additionally, Rather, it would come from its high-margin digital es, in today's financial world.
In other words, I believe that most of the gains from Roundel and Target Plus would drop directly to the bottom line. Nevertheless, And that's a huge deal considering it only has $4.
Furthermore, Nevertheless, 2 billion in trailing-12-month net income (noteworthy indeed).
For this reason, I wouldn't be surprised to see a boost of 40% or more in fits over the next three years (which is quite significant).
And considering that stock prices tend to fits over the long term, I wouldn't be surprised to see a similar move for the stock, which might be just enough to outperform the S&P 500, given current economic conditions.
This analysis suggests that kicker here for Target investors today is its dividend.
Having paid and raised its dividend for more than 50 consecutive years, it's an elite dividend stock, and right now the yield is unusually attractive at more than 4%.
Additionally, It's an oversimplification, but if its fits keep going up, one would expect its dividend to also keep going up.
In conclusion, I believe that Target has an opportunity to be a market-beating dividend growth stock over the next three years if it executes well with its digital es.
Nevertheless, And that's something that a lot of other investors might be missing today, in this volatile climate. At the same time, Jon Quast has no position in any of the stocks mentioned.
The Motley Fool has positions in and recommends Target, amid market uncertainty. On the other hand, The Motley Fool has a disclosure policy.