Target's outlook is deteriorating on anemic digital traffic, tariff exposure, Ulta loss -- BofA Securities

Target's long-term outlook is worsening due to declining digital traffic and tariff challenges, leading BofA Securities to downgrade its rating from Neutral to Underperform and cut the target price to $93. The company faces significant sales and margin risks, with a 4.1% drop in monthly active users compared to Walmart's 17.2% growth. Additionally, the end of the Ulta partnership has negatively impacted Target's beauty category, which constitutes over 10% of its merchandise revenues. Target is expected to report a 21% decline in adjusted profit for the second quarter.