Tarlowe argues TGT offers more upside than WMT despite a 47% rally, trading at 20x P/E against Walmart's 41x multiple. Target's 4% operating margin sits at a cyclical trough versus a 6% historical average, creating the key upside lever in Tarlowe's bull case. Act now: the analyst who called NVIDIA in 2010 just named his top 10 AI stocks — and Walmart didn't make the cut.
Grab the names FREE today. Jefferies equity analyst Corey Tarlowe told CNBC on Monday, August 17, that Target (NYSE:TGT) still offers more upside than Walmart (NASDAQ:WMT), even after Target's 47% run in the past year. Both companies report earnings this week, with Target reporting before the market opens on August 19, while Walmart reports before the market opens on August 20.
Walmart carries a $917 billion market cap versus Target's $70 billion, and Walmart trades at 38x forward P/E while Target trades at 17x. Lead equity analyst Corey Tarlowe's bull case for Target today rests on three key pillars: A reasonable valuation multiple despite the rally A new management team executing on merchandising Tarlowe walked through the differences in what Walmart and Target sell: "Walmart is two-thirds food. Target's about 50% what they call need-based, but only 25% is actually food and beverage," he said.
Target's skew towards discretionary products has hurt Target in previous cycles, but now it could serve as a source of operating leverage on increased sales. On product, Tarlowe pointed to Target's refresh under CEO Michael Fiddelke: "50% of their assortment is going to be new this year. For back to school, they've added 1,500 new beauty items.
They've added 3,000 new food and beverage items. This type of newness is actually translating into traffic." Jefferies' preview flagged Target traffic up almost 4%, which lines up with Target's own reported Q1 FY26 comp of +5.6% with traffic +4.4% disclosed in its Q1 earnings report, which also showed revenue of $25.44 billion, adjusted EPS of $1.71, and digital comp sales up 8.9%. Tarlowe was blunt about the limits of Target's competitive positioning: "They're not going to beat Walmart on price.
Nobody beats Walmart on price. But you have to be different, and you have to be unique, and you have to be new. And for Target, that's working." The business could see substantial operating leverage from recent investments: "This year specifically, they've actually called out up to $2 billion of incremental investment... they're in a penny-profit business.
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