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Investing.com - Wells Fargo (NYSE:WFC) raised its price target on Dollar Tree (NASDAQ:DLTR) to $130.00 from $105.00 on Tuesday, while maintaining an Overweight rating on the discount retailer’s stock. The company, currently valued at $23.44 billion, is trading near its 52-week high of $113.45, according to InvestingPro data.
The price target increase represents a significant 24% upside from the previous target and reflects growing confidence in Dollar Tree’s multi-price strategy, which the firm noted is showing encouraging early results. The market appears to share this confidence, with the stock delivering an impressive 56% return over the past six months.
Wells Fargo cited the potential for "a large tailwind building to comps and margins" despite acknowledging that the next phase of aggressive pricing carries "incremental risk" for the company.
The investment bank raised its earnings per share estimates for Dollar Tree to $5.50 from $5.30 for fiscal year 2025, and to $6.80 from $6.35 for fiscal year 2026.
The new $130 price target would represent approximately 19 times Wells Fargo’s fiscal 2026 earnings per share estimate for the discount retailer.
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. The transaction is expected to result in about $800 million in net proceeds and a cash tax shield of approximately $375 million. Following the sale, Dollar Tree will provide certain transition services, which are anticipated to boost the company’s second-half 2025 income by $85-$90 million. Additionally, Dollar Tree has replenished its share repurchase program to $2.5 billion, allowing for stock buybacks under favorable market conditions.
Barclays (LON:BARC) has upgraded Dollar Tree from Equalweight to Overweight, raising its price target to $150, citing the company’s cleaner growth story post-Family Dollar sale. Barclays also increased its earnings per share estimate for fiscal years 2025 and 2026, reflecting improved sales and margin trajectory. UBS has also raised its price target for Dollar Tree to $127, maintaining a Buy rating due to positive signs from the company’s multi-price strategy. Truist Securities continues to support Dollar Tree with a Buy rating and a $109 price target, highlighting the benefits of the Family Dollar sale in enhancing the company’s balance sheet.
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