0.71V is right for when light is reflected by the target but 1.26V indicates too much light is is received during the off period.
The best solution is to increase the light to dark ratio. Here are some things to try.
Shield the sensor from room light. Does the 1.26V reading change?
Make what the sensor sees when the target is not in view less reflective. Try changing the angle to reduce specular reflection. See attached PDF
Increase the reflectivity of the target. Retro-reflective tape is much better than white paint.
https://multimedia.3m.com/mws/media/295767O/reflectivity-flyer.pdfIf an optical solution cannot be found you can experiment with increasing the emitter resistor. Determine the resistance for two points, when the high value approaches 5V and when the low value starts to rise.
Assuming that with time dirt will reduce the light, you should select the lowest resistance that give full output.
The difference between the two points gives an indication how much dirt the system will tolerate before the lower voltage rises.