Wolfe Research upgrades Target to Top Pick, downgrades Home Depot and Five Below

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Summary · why it matters

Wolfe Research reshuffled its U.S. retail coverage on Monday, upgrading Target to Outperform and selecting it as a top pick into year-end, while downgrading Home Depot and Five Below to Peer Perform. Analyst Spencer Hanus said Target's turnaround has a rhythm not seen in years, driven by store resets, improved execution, and new leadership, and raised the 2026 EPS estimate to $8.48 and the 2027 estimate to $9.52, above the $8.95 consensus, with a price target of $160. On Five Below, Hanus flagged early signs that the Dumpling product trend is losing momentum, with Google Trends data showing fading search interest and store checks indicating flat demand, and modeled first-quarter 2027 same-store sales at minus 8% versus the consensus of minus 1.3%. For Home Depot, Hanus cited the persistent lock-in effect in the housing market, ROIC dilution from large Pro segment acquisitions, and rising rate risks as reasons to step to the sidelines, and also downgraded the broader home improvement sector to Peer Perform, noting that real legislative action to unlock the housing market would be a mid-2027 event at the earliest, while continuing to prefer Lowe's within the sector for more idiosyncratic upside.

Impact on stocks 4

Consumer Discretionary± Mixed · 3 stocks
Five Below Inc
FIVE
▼ NegativeDemandrelevance

Analyst downgrade citing fading Dumpling product trend and flat demand, with Q1 2027 same-store sales forecast at -8% vs consensus -1.3%.

The Home Depot Inc
HD
▼ NegativeCapitalrelevance

Downgraded to Peer Perform due to lock-in effect, ROIC dilution from acquisitions, and rising rate risks; analyst prefers Lowe's.

Lowe's Companies Inc
LOW
▲ PositiveCompetitionrelevance

Analyst continues to prefer Lowe's within the sector for more idiosyncratic upside, while downgrading Home Depot.

Consumer Staples▲ · 1 stocks
Target Corporation
TGT
▲ PositiveCapitalrelevance

Upgraded to Outperform and named top pick; analyst raised EPS estimates above consensus and set $160 price target, citing turnaround rhythm.

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