Bullish indicating open at $55-$60, IPO prices at $37
On Thursday, Bernstein SocGen Group analysts increased the price target for Dollar Tree stock (NASDAQ: NASDAQ:DLTR) to $86 from $82, maintaining a Market Perform rating. According to InvestingPro data, analyst targets currently range from $70 to $109, with the stock showing signs of being slightly undervalued based on its Fair Value analysis. The analysts highlighted strong comparable sales but noted that tariffs are likely to cause earnings volatility in the second quarter.
Dollar Tree’s first-quarter results exceeded sell-side expectations, with a 5.4% increase in comparable sales, surpassing the company’s guidance of 3-5% and the consensus estimate of 3.7%. The company’s strong performance is reflected in its impressive 22% return over the past six months, as tracked by InvestingPro. Margins aligned with consensus, and adjusted earnings per share (EPS) of $1.26 were 6 cents above expectations.
For fiscal year 2025, Dollar Tree set a high bar in the fourth quarter, expecting comparable sales growth between 3-5%. The company reiterated its fiscal year 2025 sales guidance, forecasting net sales of $18.5 billion to $19.1 billion, compared to the consensus of $18.9 billion.
The company also raised its adjusted EPS guidance from $5.00-5.50 to $5.15-5.65, reflecting the impact of year-to-date share repurchases, bolstered by the Family Dollar divestment. Analysts noted the potential for further upside to EPS guidance, anticipating additional share repurchases with available cash.
In other recent news, Dollar Tree has been the focus of several analyst updates following its latest financial guidance and performance. The company reported a strong first-quarter performance, with a 5.4% increase in comparable store sales, driven by rises in both customer traffic and average transaction value. However, Dollar Tree’s guidance for the second quarter indicates a significant 45-50% decline in earnings, mainly due to increased costs from tariffs and labor expenses. Despite these challenges, the company has raised its full-year gross margin outlook, expecting a 50-75 basis point increase.
Several analysts have adjusted their price targets for Dollar Tree. UBS reaffirmed its Buy rating, while Truist Securities increased its target to $109, maintaining a positive outlook on the company’s sales momentum and potential for earnings growth. Piper Sandler also raised its price target to $93, noting the company’s efforts to mitigate tariff impacts through price increases. Meanwhile, Loop Capital raised its target to $85 but maintained a Hold rating due to concerns over future earnings potential.
JPMorgan upgraded Dollar Tree’s stock from Neutral to Overweight, raising the price target to $111. The firm cited growth potential through strategic initiatives like the MPP 3.0 format store expansion and tariff mitigation strategies. Analysts generally agree on the potential benefits of Dollar Tree’s strategic measures, although some remain cautious about the company’s earnings guidance amidst ongoing challenges.
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