Key Stats for Target Stock
- Current price: ~$122 (May 20, 2026)
- Q1 FY2027 net sales: $25.4B, +6.7% YoY
- Q1 comparable sales growth: +5.6%
- Q1 GAAP and adjusted EPS: $1.71; adjusted EPS +32% vs. prior year adjusted EPS
- Full-year net sales guidance: ~+4% YoY (updated, raised by 2 percentage points)
- Full-year adjusted EPS guidance: near the high end of $7.50 to $8.50 range
- TIKR model price target: ~$177
- Implied upside: ~45%
Target Posts Its Strongest Sales Growth in Years, But Q2 Will Test Whether It Sticks
Target Corporation (TGT) reported Q1 FY2027 net sales of $25.4B, up 6.7% year over year, with comparable sales growth of 5.6% driven primarily by a 4.4% increase in traffic.
The top-line beat was broad-based: according to Chief Financial Officer Jim Lee on the Q1 earnings call, net sales grew across all six core merchandise categories, both store and digital channels, and across all income brackets.
Store channel net sales grew nearly 6% year over year, contributing more than $1B of additional sales, or roughly two-thirds of total net sales growth, according to Lee on the Q1 earnings call.
Within the digital channel, first-party sales grew nearly 9%, led by same-day delivery growth of more than 27%, according to Lee on the Q1 earnings call.
Target Plus, the company’s third-party digital sales platform, saw nearly 60% GMV growth in Q1, according to Lee on the Q1 earnings call.
Q1 adjusted EPS of $1.71 came in 32% above the prior year adjusted figure, according to Lee on the Q1 earnings call, reflecting operating leverage from the stronger-than-expected top line.
In categories where Target made the most deliberate assortment changes, the response was measurable: health and wellness-related categories drove double-digit sales growth in Q1, according to Chief Merchandising Officer Cara Sylvester on the Q1 earnings call.
Toys posted double-digit comparable sales growth for a second consecutive quarter, with new offerings priced at $20 or below generating strong results, according to Sylvester on the Q1 earnings call.
Baby comparable trends accelerated by more than 5 percentage points in the back half of Q1 following category resets, a baby concierge test in 200 stores, and 2,000 new items starting at $1, according to Sylvester on the Q1 earnings call.
Target raised its full-year net sales growth guidance by 2 percentage points, now targeting growth centered around 4%, and pointed EPS to near the high end of the $7.50 to $8.50 range, according to Lee on the Q1 earnings call.
The company did not repurchase shares in Q1, paid $516M in dividends, and deployed approximately $1B in capital expenditures, according to Lee on the Q1 earnings call.
Management maintained a cautious tone on Q2, citing a tougher comparison from the Nintendo Switch 2 launch anniversary, fading tax refund tailwinds, and softening consumer sentiment, according to Lee on the Q1 earnings call.
Target Stock’s Revenue Inflection Arrives, But Operating Margin Still Has Ground to Recover
Target stock’s income statement showed meaningful margin recovery in Q1, but the multi-quarter trend makes clear the company is still rebuilding from a compressed base.
Gross margin came in at 29% in Q1 FY2027 (the 5/2/26 quarter), up roughly 80 basis points from the same quarter a year ago (the 5/3/25 quarter at 28%).
That improvement reversed a deteriorating trend: gross margin ran at 30% in the 8/3/24 quarter, then contracted to 28% and 26% across subsequent periods before partially recovering.
Revenue tells a cleaner story: Q1 revenue of $25.4B reversed five consecutive quarters of year-over-year declines, posting +6.7% growth after the prior quarter’s -1.5% and six quarters of negative or near-flat comparisons.
Operating income of $1.14B in Q1 FY2027 was down 24% year over year from $1.50B in the 5/3/25 quarter, and operating margin compressed to 4.5% from 6.3% in that period.
The operating margin comparison is distorted by last year’s legal settlement benefit: according to Lee on the Q1 earnings call, the prior year Q1 SG&A rate included nearly $600M in legal settlement gains, and on an adjusted basis, the Q1 operating margin of 4.5% was roughly 80 basis points above last year’s adjusted rate of 3.7%.
SG&A of $5.56B in Q1 FY2027 rose about 7% year over year, reflecting deliberate investments in store payroll, training, marketing, and capital project spending, according to Lee on the Q1 earnings call.
TIKR’s $177 Target on TGT Stock Is Achievable, but Three Quarters of Execution Stand Between Here and There
The TIKR model prices Target Corporation stock at ~$177, representing roughly 45% potential total return over near 5 years from the current price of ~$122.
The mid-case scenario assumes a revenue CAGR of 2.9%, a net income margin of 3.8%, and EPS growth of 6.2% per year, with a P/E multiple compression of -0.3% annually baked into the target.
That multiple compression assumption is the embedded constraint in the model: the path to ~$177 requires Target to compound earnings at 6.2% per year while simultaneously accepting a slightly lower valuation multiple, meaning earnings growth alone must do the work with no re-rating assumed.
The Q1 result strengthened the risk/reward picture by validating the traffic-driven recovery story at the top of the model: comparable sales growth of 5.6% driven by a 4.4% traffic increase is the kind of unit economics data the mid-case assumptions depend on.
The annualized IRR of 8.2% per year in the mid case is modest but credible if management executes the multi-year assortment reset and sustains the operating leverage demonstrated in Q1.
The investment question TGT raises is whether Q1’s traffic-driven comp acceleration reflects durable category gains or a temporarily favorable setup that Q2’s tougher comparisons will quickly reset.
The Q1 result gives the bull case real data to stand on: a 4.4% traffic increase drove the 5.6% comp, category resets across home, grocery, and beauty are still early, and health and wellness posted double-digit comp growth after 1,500 new items were added.
The TIKR mid-case net income margin assumption of 3.8% also sits below Q1’s adjusted operating margin of 4.5%, meaning the model doesn’t require Target to repeat Q1 performance to hit its target.
The bear case has equally concrete footing: Q2 faces the hardest prior-year comparison of the year with no specific comp guidance provided, operating income of $1.14B was already down 24% year over year in Q1, and full-year EPS is guided only to the high end of a wide $7.50 to $8.50 range.
Target stock’s five-year revenue CAGR of 2.3% sits below the TIKR mid-case assumption of 2.9%, and with consumer sentiment declining and tax refund tailwinds fading, according to CFO Jim Lee on the Q1 earnings call, sustaining Q1’s traffic momentum through the back half is far from guaranteed.
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