Target Corp. (TGT:NYSE) reported first-quarter 2026 financial results showing higher sales across all six core merchandising categories, growth in customer traffic, and increased digital and non-merchandise revenue.
The company reported first-quarter net sales of US$25.4 billion, up 6.7% from the prior year. Comparable sales increased 5.6%, reflecting a 4.7% increase in comparable store sales and 8.9% growth in comparable digital sales. Comparable traffic increased 4.4% compared with the first quarter of 2025.
Digital comparable sales growth was led by more than 27% growth in same-day delivery, powered by Target Circle 360. Non-merchandise sales increased 24.6%, which the company said reflected growth in Roundel advertising revenue, Target Circle 360 membership revenue, and the Target+ marketplace.
First quarter GAAP and adjusted earnings per share were US$1.71, compared with prior-year GAAP EPS of US$2.27 and adjusted EPS of US$1.30. The company stated that prior-year GAAP EPS included non-recurring legal settlement gains.
"First quarter financial results were stronger than expected, providing encouraging early signs that our clarified strategy is resonating with our guests and driving broad-based growth across our business," said Michael Fiddelke, Chief Executive Officer of Target.
First quarter operating income and adjusted operating income were US$1.1 billion, representing a 22.9% decrease from prior-year GAAP operating income and a 29.1% increase from prior-year adjusted operating income. The operating income margin rate and adjusted operating income margin rate were both 4.5% in the quarter, compared with a prior-year GAAP operating income margin rate of 6.2% and an adjusted operating income margin rate of 3.7%.
The company reported a first-quarter gross margin rate of 29.0%, compared with 28.2% in 2025. According to the release, the increase reflected improved productivity in supply chain facilities, growth in advertising and other non-merchandise revenues, and lower markdown rates, partially offset by higher product costs.
Target reported first-quarter net interest expense of US$117 million, compared with US$116 million in the prior year. The effective income tax rate for the quarter was 24.4%, compared with 25.0% in the prior-year period.
Capital expenditures totaled US$1.0 billion in the first quarter, which the company said was driven primarily by investments in new stores and store remodels. The company also paid US$516 million in dividends during the quarter, compared with US$510 million in the prior year.
The company stated that it did not repurchase any stock during the quarter and had approximately US$8.3 billion remaining under its repurchase program approved in August 2021.
For the trailing twelve months through the first quarter of 2026, after-tax return on invested capital was 12.4%, compared with 15.1% for the trailing twelve months through the first quarter of 2025.
Analysts Weighed Strong Quarterly Results Against Ongoing Transition Costs
According to MarketBeat data published on May 22, Target had a consensus analyst rating of "Hold" based on 33 Wall Street analyst ratings issued during the previous 12 months. The data showed that three analysts issued sell ratings, 19 issued hold ratings, and 11 issued buy ratings.
MarketBeat reported that the average 12-month analyst price target for the stock was US$125.93, compared with a closing price of US$125.62 on May 22, 2026. The report stated that the highest published price target was US$155.00, while the lowest was US$81.00.
According to the report, the consensus price target represented "a forecasted upside of 0.25% from the current price of US$125.62." MarketBeat also stated that the consensus analyst rating for the stock remained "Hold" across one-month, three-month, and one-year comparison periods.
The report further showed that the consensus price target had increased from US$105.03 three months earlier and US$117.39 one month earlier to US$125.93 as of May 2026.
In a May 20 flash note from Roth Capital Partners, Bill Kirk, CFA, maintained a Neutral rating on the company with a 12-month price target of US$88. The report stated that "Target reported a big 1Q comparable sales and earnings beat (+5.6% y/y vs cons. +2.4% and US$1.71 vs. cons. US$1.47, respectively)." Kirk also wrote that "1Q was a very strong quarter."
The May 2026 Roth report stated that the company raised fiscal 2026 guidance, including "net sales growth around 4% (from ~2% and cons. 2.3%)" and adjusted EPS "at the high-end of US$7.50-US$8.50." However, Kirk wrote that "the earnings range falls below current consensus expectations (US$8.12)." The note also stated that "with tougher compares and higher fuel prices, Target's performance may decelerate, as is implied in Target's guidance."
According to the report, digital growth "improved (+8.9% y/y from +1.9% y/y in 4Q)," while "two-year stacked comparable sales improved to +1.8%." The report stated that the company's US$88 price target was "DCF-derived and implies ~6.2x EV/NTM EBITDA and ~11x NTM PE."
In a May 20 company update from Freedom Broker, analysts Georgy Vashchenko, Raimzhan Bayterek, and Danil Bondarets downgraded the stock to Hold from Buy and lowered the price target to US$130 from US$145.
The Freedom Broker report stated that the company "delivered a stronger-than-expected Q1'FY26, with traffic-led comparable sales growth, broad category gains, digital momentum, and improved adjusted profitability." The analysts wrote that "the quarter provides early evidence that management's refreshed merchandising and operating priorities are resonating with guests."
According to the report, "all six core merchandising categories posted growth," while digitally originated comparable sales increased 8.9%, "led by more than 27% growth in same-day delivery powered by Target Circle 360." The analysts also stated that "gross margin expanded 80 bps y/y to 29.0%, supported by supply-chain productivity, lower markdowns, and growth in higher-margin revenue streams."
The Freedom Broker analysts wrote that "management emphasized that Target is still early in a multi-year transformation." The report stated that planned operational initiatives included "more than 30 new stores this year," more than 100 remodels underway, and plans "to launch Target Beauty Studio in more than 600 stores later this year."
The analysts stated that they viewed the quarter as "a meaningful improvement, but not yet a decisive earnings inflection." The report added that "traffic-led comp growth, broad category participation, digital momentum, and better adjusted profitability support a more constructive view of Target's operating trajectory."
Freedom Broker stated that its revised US$130 target price was based on "a 5-year discounted cash flow (DCF) model utilizing free cash flow to the firm (FCFF) approach." The report also stated that the company's "digital remains one of Target's clearest growth drivers, supported by same-day delivery, Target Circle 360, and store-based fulfillment."
The third-party sources disclosed Neutral and Hold ratings alongside price targets of US$156, US$88, and US$130.
Updated 2026 Outlook and Operational Developments
Target updated its expectations for fiscal 2026, stating that it now expects net sales growth in a range of around 4% compared with 2025, which the company said was two percentage points higher than its prior range. The company also stated that it continues to expect net sales growth in every quarter of the year.
Streetwise Ownership Overview*
Target Corp. (TGT:NYSE)
| Date | Old Symbol | Old Shares | New Symbol | New Shares |
|---|---|---|---|---|
| 07/20/00 | TGT | 1 | TGT | 2 |
The company said it expects its full-year 2026 operating income margin rate to be more than 20 basis points higher than the 4.6% adjusted operating income margin rate reported in 2025. Target also stated that it expects GAAP and adjusted earnings per share to be near the high end of its prior guidance range of US$7.50 to US$8.50.
According to the release, first-quarter capital expenditures increased 31% from the prior year due primarily to investments in new stores and store remodels. The company also cited planned spending related to capital projects, additional hours and training for field teams, and higher marketing expenses during the quarter.
Target stated that same-day delivery powered by Target Circle 360 grew by more than 27% in the quarter, while non-merchandise sales growth reflected increases in Roundel advertising revenue, Target Circle 360 membership revenue, and the Target+ marketplace.
Ownership & Share Information1
Target Corp. has a market cap of US$57.04 billion, with 454.18 million shares outstanding. The company's 52-week range is US$83.44-US$133.10.
Institutions own 87.96% of Target, while Strategic Investors own 0.01%. Management & Insiders hold 0.28%, and the remaining 11.66% of shares are held by Retail.
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- James Guttman wrote this article for Streetwise Reports LLC and provides services to Streetwise Reports as an employee.
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1. Ownership and Share Structure Information
The information listed above was updated on the date this article was published and was compiled from information from the company and various other data providers.
