Retailer Target (TGT) has taken a 40% dive in the past year, amid rising consumer uncertainty and higher tariff rates on imported manufactured goods. One trader sees shares trending higher by the end of next year.
That’s based on the January 2027 $85 calls. With 616 days until expiration, 9,500 contracts traded compared to a prior open interest of 340, for a 28-fold rise in volume on the trade. The buyer of the calls paid $23.00 to make the bullish bet.
Target shares recently traded for about $96, meaning the $85 calls are already $11 in-the-money. The strike price of the option is just under Target’s 52-week low of $87.35. Target has a 52-week high of $167.40.
Over the past year, revenues are off by 3% at Target, and earnings growth is down 20%. However, shares are inexpensive at 10 times current and forward earnings, and at 0.4 times their price-to-sales.
Action to take: Target has moved into value territory today, and long-term investors may like shares here. The news cycle has been heavily negative but could swing higher in the second half of the year.
At current prices, Target pays a 4.8% dividend that is well-covered by earnings.
For traders, the January 2027 $85 calls are conservative, and could see mid-double-digit returns at some point in the next 12 months. More aggressive traders could move to a higher strike price to benefit from a likely trend higher into 2026.
Disclosure: The author of this article has no position in the company mentioned here, but may trade after the next 72 hours. The author receives no compensation from any company mentioned in this article.
