What Does Ending Price-Matching Mean for Target Shares in 2025?

Trying to figure out what to do with Target stock right now? You’re not alone. After all, it’s been a wild ride for investors. Over the last year, Target’s shares have lost 43.9%. Even if you zoom out, the last five years show a 40.9% drop. It’s easy to see why this stock has people talking, whether you already own some or are just thinking about getting in.

What’s behind these big swings? There have been some recent headlines, like Target’s decision to end its price-matching policy, which could reshape how value-conscious shoppers see the brand. At the same time, reports of employee dissatisfaction have weighed on sentiment and may have investors questioning confidence in the company’s direction. In the background, the competitive landscape is getting tougher too, with Walmart expanding benefits for their own workers. No wonder shares have continued to dip, falling 3.9% just this past week and about 5.8% in the last month.

On a brighter note for bargain hunters, Target actually gets a valuation score of 5 out of 6 on our undervalued company checks. That means by most traditional measures, the stock could be trading below what it’s really worth. But as with any investment, understanding what those numbers actually mean is crucial before you make your next move. First, let’s see how the classic valuation approaches stack up for Target. Then, I’ll show you a smarter lens for sizing up a stock’s true value.

Why Target is lagging behind its peers

Approach 1: Target Discounted Cash Flow (DCF) Analysis

The Discounted Cash Flow (DCF) model works by projecting a company’s future cash flows and then discounting them back to their value today. This process allows investors to estimate what the company is truly worth based on its long-term earning power.

For Target, the current Free Cash Flow (FCF) stands at approximately $2.26 billion. Analyst estimates project FCF to grow to about $3.49 billion by 2030. While analysts typically forecast up to five years out, further projections past 2030 are extrapolated to provide a fuller picture of the company’s long-term prospects.

Based on these cash flow projections, the DCF model gives Target an estimated intrinsic value of $159.18 per share. Compared to the current share price, this suggests the stock is trading at a 46.3% discount and indicates that it could be significantly undervalued according to this methodology.

Result: UNDERVALUED

Head to the Valuation section of our Company Report for more details on how we arrive at this Fair Value for Target.

Our Discounted Cash Flow (DCF) analysis suggests Target is undervalued by 46.3%. Track this in your watchlist or portfolio, or discover more undervalued stocks.

Approach 2: Target Price vs Earnings

For profitable companies like Target, the Price-to-Earnings (PE) ratio is a widely used and suitable metric for valuation. This multiple reflects how much investors are willing to pay for each dollar of current earnings and gives a quick sense of market sentiment toward future profitability.

The "right" PE ratio for a company often depends on factors like expected earnings growth and perceived risk. Companies with higher growth prospects and lower risk typically command higher multiples, since investors are willing to pay more for each dollar of profit in anticipation of future increases.

Target currently trades at a PE ratio of 9.9x, which is well below the Consumer Retailing industry average PE of 20.5x and also far beneath the average of its peers at 26.5x. This suggests on the surface that Target is relatively inexpensive compared to its competitors.

Simply Wall St’s “Fair Ratio” takes the analysis a step further by incorporating Target’s unique profile, including factors such as expected earnings growth, profit margins, market capitalization, and risk, rather than just comparing to industry or peers. For Target, the Fair Ratio comes out to 20.8x, which is much higher than its current PE and indicates the stock could be materially undervalued by this approach.

Result: UNDERVALUED

PE ratios tell one story, but what if the real opportunity lies elsewhere? Discover companies where insiders are betting big on explosive growth.

Upgrade Your Decision Making: Choose your Target Narrative

Earlier, we mentioned there is an even better way to understand valuation, so let’s introduce you to Narratives. A Narrative is your personal investment story for a company; it is a way to go beyond the numbers and connect your perspective about a business’s future with your financial expectations, like fair value and projections of revenue, earnings, and margins. Narratives work by linking this story to a financial forecast and then calculating a fair value, giving you a complete, transparent investment view tailored to your insights.

Narratives are incredibly easy to use and available right on Simply Wall St’s Community page, where millions of investors share, compare, and refine their thinking. By comparing a Narrative’s calculated Fair Value to the current Price, you can easily see whether it could be time to buy, sell, or hold, making your decision process smarter and more customized. What’s more, Narratives are dynamically updated with new information, like major news or earnings announcements, so you are always working with the latest data.

For example, some Target investors build a Narrative that is optimistic about brand reinvention and price discipline, leading them to estimate Target’s fair value sharply above today’s price, while others focus on rising costs and intense competition, resulting in much lower fair value targets.

Do you think there's more to the story for Target? Create your own Narrative to let the Community know!

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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