National Bank lifts Dollarama stock rating, raises target to C$166

On Friday, National Bank Financial analyst Vishal Shreedhar upgraded Dollarama Inc . (TSX:DOL:CN) (OTC: DLMAF) stock from Sector Perform to Outperform, increasing the price target to C$166.00 from C$156.00. Shreedhar anticipates the acquisition Dollarama is undertaking to close in the second half of 2025, with an enterprise value (EV) of approximately C$379 million and a last twelve months (LTM) EV/EBITDA multiple of 3.3x.

Shreedhar expects the acquisition to have a minimal immediate impact on Dollarama’s earnings per share (EPS) and foresees only a limited effect on the company’s pro forma net debt to EBITDA ratio upon closing. The analyst expressed support for the transaction, noting that while the deal is small, it is in line with Dollarama’s strategy of pursuing global acquisitions to drive growth.

The upgrade to an Outperform rating from Sector Perform is underpinned by a belief in Dollarama’s potential as a stable, high-growth company with a strong return on capital in the international market. Shreedhar suggests that despite concerns about Dollarama’s valuation multiple potentially being overstretched, there are precedents indicating that the company’s valuation may not have reached its peak. However, he notes that successful execution and the macroeconomic environment remain critical factors.

The revised price target of C$166.00, up from C$156.00, reflects Shreedhar’s positive outlook on Dollarama’s growth trajectory and the strategic fit of the acquisition within the company’s broader expansion plans. Dollarama’s stock rating upgrade and price target raise by National Bank Financial come as the retailer continues to navigate the evolving retail landscape and seeks to solidify its position through strategic growth initiatives.

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