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On Tuesday, Telsey Advisory Group analyst Joseph Feldman increased the price target for Dollar Tree stock (NASDAQ:DLTR) to $95.00, up from $82.00, while maintaining a Market Perform rating. The stock, currently trading at $88.17, has shown strong momentum with a 23.31% return over the past six months. According to InvestingPro analysis, Dollar Tree appears undervalued based on its Fair Value model, with additional insights available in the comprehensive Pro Research Report. Feldman’s statement highlighted Dollar Tree’s strategic initiatives, such as the opening of approximately 400 new stores in 2025, which represents a unit growth of about 4.5%. He noted the company’s expansion of its multi-price point assortment, which continues to be integrated across categories and aisles in the 3.0 format, as a positive development. With current annual revenue of $17.58 billion and a gross profit margin of 35.81%, the company demonstrates solid operational efficiency.
The analyst also pointed out that Dollar Tree is focusing on enhancing value, convenience, and discovery for its customers. This strategy is expected to drive productivity and profitability. Feldman acknowledged the company’s investment in store associates and technology to improve customer experience, a move that he sees as beneficial in the long term, even though it may increase expenses in 2025.
Feldman underscored the strength of Dollar Tree’s balance sheet, suggesting that it is well-positioned to support potential share repurchases, which could further bolster financial results. However, he clarified that the current guidance does not account for any share repurchase programs.
Despite the positive outlook, Feldman cautioned that Dollar Tree faces elevated tariff risks in the second half of 2025 and into 2026. Approximately 40% of the company’s total retail value purchases are directly imported, with the majority originating from China. While Dollar Tree plans to manage and mitigate a significant portion of the tariffs, the analyst expressed concern over the high level of import exposure and the uncertainty related to changes in government policies. Investors should note that Dollar Tree will report its next earnings on June 4, 2025. InvestingPro subscribers can access detailed financial health metrics and additional ProTips to better understand the company’s risk profile and growth potential.
In other recent news, Dollar Tree has been making headlines with several developments. KeyBanc Capital Markets has raised its earnings per share (EPS) estimate for Dollar Tree, reflecting a better-than-expected performance in the first quarter, despite tariff challenges. The firm adjusted its EPS estimate for 2025 to $4.65 from $4.55, acknowledging the impact of price hikes from $1.25 to $2.00 on certain items. Meanwhile, Morgan Stanley (NYSE:MS) maintained an Equal-weight rating on Dollar Tree, expressing caution due to ongoing tariff concerns, which they believe could impact profitability. Analysts from Morgan Stanley expect Dollar Tree to report a 4% increase in comparable store sales for the first quarter of 2025, slightly above consensus estimates, but anticipate a miss in EPS estimates.
Guggenheim has also made a move, raising the price target for Dollar Tree to $100 from $95, citing strong first-quarter pre-announcements and robust Easter sales. The firm remains cautious about the second half of the year due to the persistent 145% tariff on goods from China but recognizes Dollar Tree’s strategic pricing adjustments. In a strategic shift, Dollar Tree announced Duncan MacNaughton as the future Chairman and CEO of Family Dollar, with the divestiture expected to finalize in the second quarter of 2025. Bernstein analysts noted that Dollar Tree could face a -9.2% EPS impact from the recent US-China tariff de-escalation, highlighting the company’s exposure to Chinese imports. These developments underscore the complex landscape Dollar Tree navigates amid tariff challenges and strategic changes.
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