Freedom Broker raised its Target price target to $159 after a strong quarter

Freedom Broker raised its price target for shares of U.S. retailer Target (TGT) to $159 and maintained its “Hold” recommendation. The valuation revision followed the results for the second quarter of fiscal 2026: revenue and earnings per share once again beat market expectations, with the expansion of the digital business being one of the key drivers.

Digital business supports Target sales

Freedom Broker analysts view the digital segment as one of the most notable drivers of Target’s further growth. Target Plus marketplace sales in the second quarter rose by more than 40%, and revenue from the Target Circle 360 subscription increased by the same amount. Gross revenue of the Roundel advertising platform grew by nearly 20%. The company also partners with OpenAI and Google Gemini, and the volume of purchases using AI agents increased 3.5x year over year.

According to Reuters, Target’s comparable sales increased 3.8% year over year, with digital sales up 8.7% and customer traffic up 3.6%. Total company revenue reached $26.54 billion, rising 5.3% year over year.

Another positive factor was higher traffic. Comparable traffic increased 3.6% year over year, while the average ticket rose by 0.2%. Positive momentum was observed across all product categories. Food and beverage sales grew especially strongly—up 7.2%. This category accounts for about 23% of Target’s sales.

Duty refunds helped Target increase margin

A duty refund had a material impact on the results. Target received about $994 million in pre-tax profit from the refund, which was recorded as a reduction in cost of sales. Even excluding this factor, gross margin increased by about 1 percentage point.

Target’s gross profit rose 22% year over year to $8.93 billion, and gross margin reached 33.7%, up 4.7 percentage points. Net income nearly doubled to $1.88 billion. EPS reached $4.11, and excluding the impact of the duty refund it was $2.46 versus the consensus forecast of $2.11.

Target accelerates store refreshes and expansion

In the second quarter, Target opened 17 stores, bringing the total to 2019. At the same time, the company continues a large-scale renovation of its network: more than 100 projects are underway, and by year-end their number should approach 130.

Management is paying special attention to the grocery segment. The company completed its largest grocery-department renovation in a decade and over the past 12 months lowered prices on more than 10,000 items in certain categories. In the updated format, snack sales are already 15% above last year’s level.

Freedom Broker raised its Target valuation

After a strong quarter, Target management raised its guidance for sales, operating margin, and profit. The company expects revenue growth of about 5% for fiscal 2026, and its GAAP and Non-GAAP EPS guidance is $9.90–10.90.

Freedom Broker notes that comparable-sales growth driven by traffic, improving performance across product categories, strong online-sales dynamics, and higher adjusted profitability allow for a more positive assessment of Target’s operating trajectory. Analysts raised the stock’s price target to $159 while maintaining a “Hold” rating.

What Freedom Broker previously wrote about Target

Previously, Freedom Broker reported that Target reported second-quarter results above expectations and raised its full-year forecast.The company’s net income rose to $1.88 billion, or $4.11 per share, versus $935 million, or $2.05 per share, a year earlier. Revenue increased to $26.54 billion, exceeding the market forecast of $26.14 billion, and comparable sales rose 3.8% versus expectations for 2.4% growth. Following the report, Target also raised its profit forecast for the full fiscal 2026 year.

Before that, Freedom Broker noted that Target’s financial results beat forecasts. Thus, the latest results continue the trend of recovery in the retailer’s operating performance.

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