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Target shares gain in 2026 as turnaround targets higher operating margin
The retailer is forecasting full-year operating margin above 2025 levels by more than 20 basis points, after improving adjusted operating margin to 4.5% in the first quarter.
Target is entering its fiscal second-quarter report with its stock already up significantly in 2026, as investors look for continued progress on profitability rather than sales alone, according to analysis published by Yahoo Finance. Consensus estimates ahead of the results call for revenue growth of 3.5% to $26.09 billion, adjusted earnings rising 14% to $2.34 per share, and comparable sales increasing 2.4%. That comes after a first quarter that showed net sales up 6.7%, comparable sales up 5.6%, and traffic up 4.4%.
On the margin front, Target has improved adjusted operating margin to 4.5% from 3.7%. The analysis notes gross margin expanded 80 basis points to 29%, even as the adjusted SG&A expense rate edged higher to 21.9% from 21.7%.
Management expects the full-year operating margin to exceed the 2025 adjusted rate of 4.6% by more than 20 basis points. The turnaround plan remains costly, with Target planning about $5 billion of capital expenditures and $1 billion of incremental operating investment in 2026, including more than 30 new stores and over 130 remodels, plus investments in technology and supply chains.