11:40 AM EST, 02/24/2025 (MT Newswires) -- Target's ( TGT ) holiday performance derisked the company's Q4 results but uncertainties continue to cloud the sector's visibility, UBS Securities said in an earnings preview.

Target ( TGT ), in January, raised its Q4 comparable sales growth forecast to around 1.5%, up from its prior expectation of flat sales, citing a strong holiday season. The company also reaffirmed its Q4 and full-year adjusted earnings per share guidance of $1.85 to $2.45 and $8.30 to $8.90, respectively.

Target ( TGT ) is set to release its Q4 results on March 4.

UBS said in a Sunday note that Target's ( TGT ) holiday season traffic growth of 3% indicates that the company has not lost consumer mindshare and the firm expects the retailer to exceed the midpoint of its Q4 earnings per share guidance of $1.85 to $2.45. The firm believes this positions Target ( TGT ) for an upward revision cycle in 2025.

However, investors remain concerned about Target's ( TGT ) ability to stabilize market share, close the comparable sales gap with Walmart (WMT), and deliver consistent financial performance. UBS also pointed to broader sector uncertainties, such as macroeconomic conditions and discretionary spending trends.

Despite these concerns, the firm sees multiple catalysts supporting Target's ( TGT ) outlook, including price stabilization in discretionary categories, stronger digital sales momentum, and benefits from innovation and new partnerships.

UBS expects Target ( TGT ) to guide for 2025 comparable sales growth in the flat to 2% range and full-year EPS between $9 and $10, setting achievable targets that could leave room for positive revisions.

UBS has a buy rating on Target ( TGT ) stock, with a $170 price target.

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