Is Target Really a Private Equity Prize? What the Numbers Actually Say

When a stock drops over 35% in a year, acquisition speculation inevitably follows. Target Corporation (NYSE: TGT) is no exception. With Wall Street analysts now floating the idea that the discount retailer could become a private equity target, investors are asking whether this is a real opportunity or just wishful thinking.

The Math Behind Target Acquisition Rumors

Let’s start with why private equity is even looking at Target. The numbers seem compelling on paper. The company’s market cap sits around $40 billion. When you factor in net debt and lease liabilities, the enterprise value climbs to $56.3 billion. A successful target acquisition would require a takeover premium—likely pushing the total deal value above $60 billion.

That’s a massive check to write. For context, Electronic Arts (NASDAQ: EA) is currently being acquired by a consortium of private equity firms and investors for $55 billion. A Target acquisition of this scale would make it the largest private equity deal on record.

Yet here’s where it gets interesting: major private equity firms collectively hold billions in uninvested capital (dry powder). With enough firms pooling resources, the funding isn’t impossible. Add to this the precedent of older retailers like Nordstrom going private, and Target acquisition suddenly feels less like speculation and more like a plausible scenario.

Why Buying on Acquisition Hopes Is Risky

The problem? Predicting a target acquisition is more luck than skill.

D.A. Davidson analysts have published a $108 price target for Target stock, assuming a private equity takeout occurs. That’s about 23.6% above where the stock traded in mid-October. Tempting, right? But before you bet the farm on this narrative, consider the obstacles.

Near-term volatility is real. Quarterly earnings reports could disappoint. Negative sentiment around customer service and operational issues could persist. Instead of climbing toward $108, the stock could sink further—and with it, the valuation that private equity would be willing to pay.

Private equity may never arrive. Current shareholders and management might prefer a standalone turnaround strategy. If Target successfully restores investor confidence without outside intervention, the stock could ultimately climb well above $108. That’s the upside that gets overlooked when chasing acquisition narratives.

Timing is nearly impossible. You can’t reliably predict when—or if—a target acquisition will happen. Sitting through 12-18 months of volatility waiting for a bid that may never materialize is a poor strategy.

The Smarter Play: Think Long-Term

Rather than chase takeover premiums, consider Target as a multi-year holding.

The company’s current forward P/E ratio is just 11—historically modest compared to the mid-to-high teens it’s traded at in recent years. That suggests the market has overshot to the downside. Over the next few years, macroeconomic pressures like tariffs and inflation could normalize. Management’s public relations missteps will fade. Operational improvements will gain traction.

Even modest earnings growth combined with valuation reversion could produce strong returns—potentially exceeding what a private equity target acquisition would offer.

There’s another reason to hold: Target is a Dividend King with over 50 consecutive years of dividend increases. The current forward dividend yield stands at 5.33%. While waiting for a turnaround or acquisition to materialize, you’re actually getting paid.

The Bottom Line

Takeover rumors get headlines. Target acquisition speculation makes for compelling “what if” scenarios. But the best returns rarely come from guessing deal timelines. They come from buying quality companies when they’re unfairly beaten down and holding through the recovery.

Target trades at depressed valuations for good reasons—but those reasons are likely temporary. Whether or not a private equity buyer materializes, the patient approach has the better risk-reward profile. Buy for the business, not the rumor.