Target raises 2026 outlook as Q2 sales rise and beauty delivers high single

Walmart received a $2.9B tariff refund, boosting gross margin to 25.4% and helping it beat revenue and adjusted earnings estimates. However, its stock fell 8% due to comparable sales missing expectations. Target, which received a $994M refund, reported adjusted EPS of $2.46, beating estimates, and comparable sales of 3.8%, also exceeding expectations.

Target reported Q2 sales up 5.3% YoY and net earnings doubled to $1.9B, including a $994M tariff refund. The company raised annual guidance but did not commit to passing savings to customers. Target expects more refunds, totaling 'the significant majority' of what it applied for, according to CFO Jim Lee.

The Treasury announced it would double buybacks of longer-term notes, causing 30-year Treasury yields to drop to 5.194% and the Dow Jones to close up 0.22%. Fed minutes indicated potential rate hikes if inflation persists. Moderna's stock surged 175% after successful cancer vaccine trial data. Bitcoin rose above $68,000, driven by Treasury optimism and crypto legislation interest.

Target (TGT) raised its 2026 outlook, projecting sales growth of ~5% and operating margin of ~6%. Q2 comps rose 3.8%, with digital sales up 8.7%. The company plans to invest in key categories. Analysts' EPS estimates have increased 4.4% over three months.

U.S. stocks rose after the Treasury announced plans to double purchases of longer-term Treasurys, easing bond market pressure. The S&P 500 gained 0.2%, ending a 3-day losing streak. Strong earnings from Estee Lauder, Target, and others also supported gains. Moderna and Merck surged on positive cancer vaccine trial results. The 10-year Treasury yield fell to 4.64% from 4.71%.

Target (TGT) reported adjusted EPS of $2.46 on $26.54B revenue, exceeding estimates. DA Davidson raised its price target to $185 (16% upside) citing improved inventory and sales. Barclays increased its target to $140 but maintained an 'Underweight' rating. TGT shares are up 58% YTD.