TSX runs higher on rate cut expectations
On Thursday, Morgan Stanley (NYSE:MS) analysts increased the price target for Dollar Tree stock (NASDAQ: DLTR) to $96 from the previous $80. The analysts maintained an Equalweight rating on the stock, citing Dollar Tree’s strong first-quarter performance in 2025 as a key factor for the revision. According to InvestingPro data, Dollar Tree, currently trading at $88.62 with a market capitalization of $18.62 billion, appears undervalued based on its Fair Value analysis. Notably, 8 analysts have recently revised their earnings estimates upward for the upcoming period.
The analysts noted that the updated price target is based on a valuation of approximately 15 times their estimated earnings per share (EPS) for 2026, which is projected to be around $6.39. They also revised their EPS estimates for 2025 and 2026 upward by about 5% and 6%, respectively, to $5.50 and $6.39, reflecting updated guidance and the company’s recent financial performance. The company currently trades at a P/E ratio of 19.08, with InvestingPro analysis revealing over 10 additional key insights about Dollar Tree’s valuation and growth prospects.
In their analysis, the Morgan Stanley team modeled comparable sales growth of 4.6% for 2025 and 4.0% for 2026. They also projected segment gross margin expansion of approximately 65 basis points in 2025 and 10 basis points in 2026. While segment selling, general, and administrative expenses are expected to deleverage by about 100 basis points in 2025, they anticipate leverage of around 10 basis points in 2026. The company has demonstrated strong momentum, with a notable 22.13% price return over the past six months.
The analysts expect EBIT growth of 5% in 2025 and 13% in 2026, with EPS growth of 8% and 16% for the respective years. They raised their valuation multiple to around 15 times the 2026 EPS, up from the previous 13 times, taking into account the combination of challenges and recent momentum for Dollar Tree. The company maintains profitability with $1.09 billion in net income over the last twelve months, and detailed financial analysis is available in the comprehensive Pro Research Report on InvestingPro.
In other recent news, Dollar Tree Inc . (NASDAQ:DLTR) reported its first-quarter 2025 earnings, exceeding analysts’ expectations with an adjusted earnings per share (EPS) of $1.26, surpassing the forecasted $1.21. Despite this earnings beat, the company’s revenue fell short of projections, reaching $4.6 billion compared to the anticipated $4.72 billion. Analysts from Goldman Sachs raised the price target for Dollar Tree stock to $94 from $86 while maintaining a Sell rating, highlighting the company’s multi-price point strategy and continued trade down from higher-income customers. Telsey analysts also increased their price target to $100 from $95, maintaining a Market Perform rating, citing Dollar Tree’s transformation progress. KeyBanc analysts reiterated a Sector Weight rating, acknowledging the company’s strong comparable sales growth of 5.4% in the first quarter but noting ongoing tariff challenges. Dollar Tree plans to convert half of its stores to the MultiPrice 3.0 format by year-end, a move that has contributed to the positive trends seen in customer traffic and transaction values. Despite facing higher than expected tariff costs, Dollar Tree management remains optimistic about overcoming these challenges and has maintained its guidance for the year.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.