Dollar Tree stock outlook reaffirmed with Buy rating by UBS

Investing.com - UBS has reiterated a Buy rating on Dollar Tree (NASDAQ:DLTR) with a price target of $135.00 following the company’s press release ahead of its investor day. The discount retailer, currently valued at $19.2 billion, has shown strong momentum with a 7.8% gain over the past week. According to InvestingPro analysis, the company maintains a "GOOD" overall financial health score.

The discount retailer reaffirmed its third-quarter and fiscal year 2025 outlook, addressing market concerns about recent comparable sales trends. The company also provided long-term earnings guidance, projecting high-teens EPS growth in 2026 (approximately $6.50 compared to consensus estimates of $6.37) and a 12-15% EPS compound annual growth rate from 2026 to 2028. Trading at a P/E ratio of 18.3x, the company boasts a robust free cash flow yield of 10%. InvestingPro subscribers can access 8 additional key insights about Dollar Tree’s financial performance and growth potential.

Dollar Tree’s growth projections are built on an underlying growth rate assumption of 8-10%, which does not appear to include the potential impact of share buybacks. The retailer’s third-quarter-to-date comparable sales update suggested that its September/October slowdown was less severe than some market participants had anticipated.

UBS noted that the company has established what it considers reasonable to conservative intermediate and long-term targets, effectively setting benchmarks against which future performance can be measured.

The firm believes consistent performance against these benchmarks will be key for Dollar Tree to maintain credibility with investors, potentially leading to multiple expansion over time.

In other recent news, Dollar Tree, Inc. has reaffirmed its outlook for the third quarter and fiscal 2025, aiming for annual earnings per share growth of 12-15% from fiscal 2026 through 2028. This announcement was made during the company’s 2025 Investor Day, where Dollar Tree also discussed its strategy following the separation from Family Dollar. Bernstein SocGen Group raised its price target for Dollar Tree to $103, maintaining a Market Perform rating, as the company adjusted its sales expectations for fiscal years 2025-2028. Meanwhile, KeyBanc reiterated its Sector Weight rating on Dollar Tree, highlighting the retailer’s improvement opportunities in merchandising, stores, and operations.

Truist Securities maintained a Buy rating with a price target of $129, despite concerns over Dollar Tree’s recent financial performance. Additionally, Dollar Tree has partnered with Legion Technologies to implement a workforce management platform across its North American operations, impacting over 9,000 stores and 18 distribution centers. These developments reflect Dollar Tree’s efforts to enhance operational efficiency and long-term growth.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.