Target Corporation (TGT) proved Thursday that beating earnings estimates doesn't always earn you applause. The big-box retailer posted third-quarter adjusted earnings of $1.78 per share, topping the $1.72 analyst consensus, yet shares tumbled anyway. The culprit? A dimmed outlook that reflects what Target is seeing in the aisles: consumers tightening their wallets when it comes to non-essential purchases.

Target narrowed its 2025 adjusted EPS guidance to $7.00-$8.00, down from the previous $7.00-$9.00 range and falling short of the $7.36 consensus. For the fourth quarter, management is sticking with expectations of a low-single-digit sales decline.

The AI Gambit

In what might be the retail industry's boldest tech play this year, Target is wiring its stores into ChatGPT through an expanded OpenAI partnership. The move represents a significant bet that artificial intelligence can help reverse the company's fortunes by improving both sales and operational efficiency.

What Analysts Are Seeing

Telsey Advisory Group analyst Joseph Feldman maintained his Market Perform rating with a $110 price target. He pointed to continued economic pressure on consumers, particularly around discretionary spending categories, as the main headwind.

Feldman noted that incoming CEO Michael Fiddelke is focused on boosting performance through sharper merchandising, store improvements, and greater technology adoption. Those initiatives could pay dividends eventually, but they'll require investor patience.

The analyst projects same-store sales will drop 2.1% in 2025 before rebounding to 1.5% growth in 2026. His full-year 2025 EPS estimate sits at $7.48.

Price Action: TGT shares traded down 2.47% to $86.22 Thursday.