Target Corporation (TGT) shares soared 5.54% in pre-market trading on Wednesday, despite the company cutting its annual forecasts, as its first-quarter earnings surpassed Wall Street estimates. The unexpected rise in stock price reflects investors' positive reaction to the company's better-than-expected performance in a challenging retail environment.

The retail giant reported first-quarter adjusted earnings per share of $1.30, which, while lower than the $1.61 analysts had expected, still beat the company's own projections. Target's net sales for the quarter reached $23.85 billion, slightly below the estimated $24.27 billion. Despite a 3.8% decline in comparable sales, which was steeper than the anticipated 1.08% drop, the company's operating income rose to $1.472 billion, significantly exceeding the expected $1.059 billion.

However, Target lowered its outlook for the full year 2025, now expecting a low-single digit decline in sales compared to its previous forecast of about 1% growth. The company also reduced its adjusted earnings per share guidance to a range of $7.00 to $9.00, down from the earlier projection of $8.80 to $9.80. Target attributed these revisions to weakened consumer confidence and a pullback in discretionary spending, partly due to ongoing tariff pressures. Despite these headwinds, the market appears to be responding positively to Target's ability to navigate these challenges and deliver better-than-expected results in the current quarter.