Will Target guide FY2026 adjusted EPS below $8.00 at the March 2026 earnings call?

The guidance trajectory is the most telling fact: $9+ → $7-$9 → $7-$9 → $7-$8 over the course of FY2025. Each revision was downward, with the final narrowing to $7-$8 indicating management lost confidence in the upper range. For FY2026 guidance to reach $8.00 midpoint, Target needs roughly $0.50 EPS improvement over the FY2025 $7.50 midpoint. The $2B Enterprise Acceleration Office is the primary lever, but industry delivery rates of 50-70% mean $1.0-$1.4B in actual savings. With 4 consecutive negative comp quarters creating revenue headwinds that compress the fixed-cost absorption base (SG&A deleveraged +60bps in Q3), cost savings face an uphill battle against revenue-driven deleverage. The unresolved debate — turnaround credit vs. evidence gap — tilts toward caution given zero positive comp quarters. Management may guide conservatively to reset expectations after the painful FY2025 revision cycle.

The critical question is whether management will guide to $8.00+ midpoint after the credibility damage of cutting FY2025 guidance from $9+ to $7.50 midpoint — a 17-21% reduction. Two opposing forces: (1) The Financial Community Meeting on March 3 is a venue where management typically presents an optimistic multi-year outlook, which could push them to guide $8.00+ to validate the turnaround narrative. (2) After burning investors with multiple downgrades, management has strong incentive to guide conservatively and beat rather than set another ambitious target they might miss. The $2B cost program at 50-70% delivery yields $1.0-$1.4B savings, but the question tests adjusted EPS which excludes restructuring charges — the cost savings should flow through to adjusted EPS more cleanly. However, the gross margin improvement of +360bps from trough suggests some recovery is already in the base. Net new EPS improvement from cost saves alone may be $0.30-$0.50, getting to roughly $7.80-$8.00 midpoint — right at the threshold. This is genuinely close to 50/50.

Examining the edge case: What if Q4 FY2025 results (reported same day as guidance) are weak? The FY2025 guidance was narrowed to $7-$8, meaning management expected $7.00 as the floor. If Q4 comes in soft, actual FY2025 EPS could land at $7.20-$7.50 range, making an $8.00+ FY2026 guide require 7-11% EPS growth — ambitious for a retailer with negative comps. Conversely, if Q4 is strong and FY2025 lands at $7.70-$8.00, then $8.00+ FY2026 is a much easier bridge. The tariff uncertainty cited by management as a factor in guidance cuts adds a wildcard — management may use tariff uncertainty to justify a wider or lower FY2026 range. The committee's finding that 'the 33% rally assigns turnaround-in-progress credit that operations have not yet earned' suggests the market may be ahead of reality. I lean slightly above 50% for YES (below $8.00) because the pattern of downward guidance revisions, conservative incentives post-credibility damage, and revenue headwinds outweigh the cost savings uplift.

The facts are clear: FY2025 guidance was slashed from $9+ to $7.50 midpoint, four consecutive negative comp quarters, and the $2B cost program delivers only 50-70% historically. Management got burned badly by guiding too high in FY2025 and will not make that mistake again. The Financial Community Meeting format actually favors conservatism — management wants to set multi-year targets they can beat, not ones they have to walk back. At $7.50 FY2025 midpoint, getting to $8.00 requires meaningful improvement that negative comps actively work against. The committee's cross-lens finding that both Myth Meter (DEMANDING expectations) and Gravy Gauge (CONDITIONAL revenue) point to a market pricing in recovery not yet demonstrated is decisive.

Counterpoint to the bearish consensus: Target's gross margin improved +360bps from trough to 28.2%, the shrink problem was resolved, and FCF is $4.48B. The $2B cost program with 1,800 HQ roles already eliminated means some savings are already flowing through. Even at 50% delivery, $1B in savings over 2-3 years means $300-500M flowing through in FY2026, which on ~460M diluted shares is $0.65-$1.09 incremental EPS before tax — more than enough to bridge from $7.50 to $8.00+. The operating margin target of 6%+ (from 5.2%) provides a credible framework. Target may guide to exactly $8.00 midpoint or slightly above as the 'achievable recovery' narrative, especially at the Financial Community Meeting where they want to signal progress. The $8.00 threshold is not a high bar relative to the $8.86 they earned in FY2024.

The decisive factor is the guidance trajectory pattern: $9+ → $7-$9 → $7-$9 → $7-$8. Each revision moved the midpoint down or narrowed to the lower end. This pattern of progressive sandbagging suggests management's internal forecasts deteriorated throughout FY2025. For FY2026, they would need to reverse this trend — possible but requires a genuine inflection. The committee identifies this as the 'first quantitative test of whether the market's repricing from ~10x to ~14x is justified.' Management knows this test is coming, which creates dual pressure: guide high enough to not disappoint, but low enough to be credible. Given the negative comp trend and tariff headwinds, the safe play is guiding $7.50-$8.50 (midpoint $8.00) or $7.25-$8.25 (midpoint $7.75). The question asks about midpoint below $8.00 — at the precise boundary, management could go either way. I lean slightly YES given the pattern.

FY2025 midpoint $7.50, four negative comp quarters, guidance cut from $9+. Management burned by over-guiding. Cost savings deliver 50-70% historically. $8.00 FY2026 needs $0.50 improvement from a declining revenue base. More likely than not they guide below $8.00 midpoint.

The Financial Community Meeting format matters — management typically presents multi-year aspirational targets, not sandbagged guidance. FCF is healthy at $4.48B and gross margins recovered. The $2B cost program is real with HQ roles already cut. But the negative comp trend and tariff uncertainty provide cover for conservative guidance. Close to a coin flip but slightly favoring below $8.00 given the downward guidance pattern.

Guidance was cut every quarter in FY2025. Pattern recognition says below $8.00 is more likely. Cost saves alone won't overcome revenue deleverage from negative comps. Management will play it safe. But confidence is LOW because this is ultimately a management decision that could go either way near the $8.00 boundary.