Bernstein reiterates Dollar Tree stock at Market Perform despite Q2 beat

Investing.com - Bernstein SocGen Group has reiterated its Market Perform rating and $109.00 price target on Dollar Tree (NASDAQ:DLTR) following the retailer’s second-quarter earnings report. According to InvestingPro data, the stock is currently trading near its Fair Value, with a market capitalization of $20.45 billion.

Dollar Tree delivered a strong beat against its prior guidance, with comparable sales growth of 6.5% exceeding both the company’s guidance of 3-5% and the consensus estimate of 4.6%. Margins also came in above consensus expectations due to strong leverage.

The company reported adjusted earnings per share of $0.77, beating estimates by 34 cents, which included a 20-cent benefit from tariff timing. Despite the positive results, Bernstein analyst Zhihan Ma expressed concerns about the sustainability of Dollar Tree’s momentum.

Ma noted that Dollar Tree’s comparable sales have already decelerated in the third quarter to date, falling to approximately 4%. The analyst believes the company’s second-half performance will depend on consumer resilience in response to price increases.

Looking ahead to 2025, Bernstein expects Dollar Tree to face tough comparisons as several one-time tailwinds dissipate, including trade-in benefits, price increases, advantages from Party City’s closure, and Temu’s market pullback.

In other recent news, Dollar Tree reported its second-quarter earnings for 2025, achieving an adjusted earnings per share (EPS) of $0.77, which significantly surpassed the forecasted $0.40 by 92.5%. The company’s revenue reached $4.6 billion, slightly exceeding expectations. Despite these positive financial results, several investment firms have adjusted their price targets for Dollar Tree. Piper Sandler lowered its price target to $108 while maintaining a Neutral rating, following the company’s earnings report that showed a 6.5% increase in comparable sales. Morgan Stanley, on the other hand, raised its price target to $105, citing solid top-line trends that could continue into the second half of 2025. JPMorgan also increased its price target to $140, highlighting multiple growth drivers that may support long-term EPS growth. Truist Securities raised its target to $129, noting that Dollar Tree’s results exceeded their expectations with a comparable sales growth of 6.5%. These developments reflect varying levels of optimism among analysts regarding Dollar Tree’s future performance.

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