Dollar Tree stock price target raised to $127 by UBS on multi-price strategy

Investing.com - UBS raised its price target on Dollar Tree (NASDAQ:DLTR) to $127.00 from $108.00 while maintaining a Buy rating following meetings with the company’s leadership team. The retailer, currently valued at $22.3 billion, has seen its stock surge nearly 56% over the past six months, according to InvestingPro data.

The price target increase comes shortly after Dollar Tree completed the sale of its Family Dollar business, which UBS notes has simplified the company’s business model significantly. With a P/E ratio of 21.07 and trading near its 52-week high of $109.74, InvestingPro analysis reveals 11 additional key insights about the company’s valuation and prospects.

UBS reports that Dollar Tree is seeing positive signs from its multi-price strategy, including the return of "trade-in" customers who had been largely absent during much of 2024.

The retailer views these returning customers as an opportunity to increase shopping frequency through its expanded product assortment, according to UBS’s analysis.

Dollar Tree’s management team pointed to successful competitors in other geographic markets as evidence that a multi-price approach can be a winning formula with potential for improved profit margins.

In other recent news, Dollar Tree has completed the sale of its Family Dollar business to private investment firms Brigade Capital and Macellum Capital for approximately $1 billion. This transaction is expected to yield around $800 million in net proceeds for Dollar Tree and will also generate an additional cash tax shield of about $375 million. Dollar Tree’s pro forma income from continuing operations increased by $23.6 million to $337.1 million for the 13 weeks ended May 3, 2025. The company also reported a 5.4% increase in first-quarter comparable sales, exceeding sell-side expectations and its own guidance. Dollar Tree raised its adjusted earnings per share guidance for fiscal year 2025 to $5.15-$5.65, reflecting the impact of year-to-date share repurchases. The Board of Directors has replenished the company’s share repurchase authorization to $2.5 billion. Analysts from Bernstein SocGen raised Dollar Tree’s stock price target to $86, while UBS maintained a Buy rating with a $108 price target. UBS highlighted recent guidance confusion as a potential opportunity, noting expected earnings volatility due to tariffs and increased costs.

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