Target hits all-time high at $132.64 after Q1 earnings beat of 17%

Target Corp. shares hit a record $132.64 after first-quarter earnings beat consensus by 17%, extending a 38% year-to-date rally.

"The results reflect broad-based growth across all six core categories, with traffic returning as a meaningful driver," said Michael Fiddelke, chief executive officer of Target, on the earnings call.

Revenue rose 6.7% to $25.44 billion, with comparable sales up 5.6% on 4.4% traffic growth. Digital comparable sales jumped 8.9%, while high-margin non-merchandise revenue from Roundel ads and Target Circle 360 grew nearly 25%. Gross margin expanded to 29% from 28.2% a year earlier.

The rally has already priced in the turnaround. At 15x forward earnings, the stock trades in line with its historical average, leaving limited room for multiple expansion. Management's raised guidance of roughly 4% full-year sales growth now sets the bar for the next catalyst — second-quarter results due in August.

The Minneapolis-based retailer reported EPS of $1.71, topping the $1.46 consensus estimate by 17.03%. All six core merchandising categories posted year-over-year growth in the quarter, with store comparable sales rising 4.7%.

Guggenheim raised its price target on Target to $145 from $140, maintaining a Buy rating. Still, 24 of 38 analysts tracked by Bloomberg rate the stock a Hold, while three rate it a Strong Sell.

The bear case centers on valuation and consumer health. After-tax return on invested capital declined to 12.4% from 15.1%, reflecting a 31% increase in capital expenditure on new stores and remodels. The University of Michigan consumer sentiment index sits at 49.8, a level historically associated with recessionary spending patterns. Tariff impacts remain excluded from guidance, adding uncertainty to the second half.

The bull case rests on momentum. Retail sales at the macro level reached $757.1 billion, a 12-month high, providing fundamental support. If Target delivers near the high end of its $7.50 to $8.50 full-year EPS range, shares could reach $139.27 within 12 months, according to 24/7 Wall St.'s bull scenario.

The HOLD rating with 90% confidence reflects a balanced risk-reward. The execution is real, but the easy gains from the September 2025 lows of $81.83 have been captured. Investors will watch second-quarter traffic trends and any tariff resolution for the next directional signal.

This article is for informational purposes only and does not constitute investment advice.