Though, a good way to check with one is a Target Sheep is my checking how many Gems is the feeding and harvest, if the sheep has a higher price, it's a Target Sheep. Since they look very similiar to the normal sheep (the only physical difference being the paint that they display when ready to be harvest), it's adviced to put them in a whole different pen, away from the normal ones to avoid confusion between the two types. After that, you can put them in your pen. You will receive the Target Sheeps from the quest Dawn of the Dragon Racers and, to activate them, you need to go to your backpack and click on the Target Sheep. Unlike the normal sheeps you can't buy Target Sheeps, they display paint in form of targets and, desptie giving you 2 spools of wool, you won't receive for it. This quest will go on to be infamous for being quite.
Target Sheep are just a different skin of a regular white and black sheep: They eat the same feed, take the same amount of time to grow wool, however, they give 2 spools of wool (from their respective color) instead of one. Returning to the Nest is a platform heavy quest similiar to the likes of Secret of the Leviathan s The Labyrinth quest except instead of relying on one platforming section, it relies on four minigame-esque sections and a 5th section requiring most the steps you learned to get to the end. Target Sheep (left) and normal sheep (right) ready to be collected