I also have this problem, and many have reported having it in the steam discussions:
https://steamcommunity.com/app/1222730/discussions/0/2940245647585683547/
https://steamcommunity.com/app/1222730/discussions/0/2940245647584606802/?tscn=1601941469
And here is another thread on EA support:
https://answers.ea.com/t5/Bug-Reports/Target-Selection-Not-Showing-in-VR/td-p/9540388/highlight/false
I'll fill out the same form in case it helps
Product: Star Wars: Squadrons
Platform:Steam-PC
Please specify your platform model. GTX 1070, 16gb RAM, Ryzen 5 2600, 3440x1440 g-sync desktop monitor, second 1080p display and then the vr headset.
What is your gamertag/PSN ID/EA Account name? Steam: yerroc Origin: HardEwok
Are you playing in VR? Yes
Which VR Platform are you using? Steam VR- HP Windows Mixed Reality Headset (the first one that they launched not the reverb line)
Which part of the game is the issue happening in? whenever you lock on/ target someone or something
What were you doing when the bug occurred? Step by Step detail is helpful. Playing in VR, It happens in every single mode, regardless of settings.
Where did this issue occur? Please include menu name or in game location. When targeting anything.
When did this happen? From the release of the game up to the present
How often does the bug occur? Out of the 15.6 hours I have played, only one time did I not get this glitch.
How severe is your issue? Makes the game significantly harder as you have to eyeball everything. Ruins competitive play and makes VR non viable if you have this bug.
What happens when the bug occurs? The white box which is supposed to appear on the target that I have locked onto, never is on the target; Instead the white box just moves around me as the I turn my head in VR
What do you expect to see? A working target tracker
Which ship were you playing? If not applicable, just answer "no" or "none." Every ship
What components were you using? It carries into everything
Which customizations (if any) were you using? I have tried changing settings many times and it appears that they have no effect on the bug.