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On Monday, Truist Securities analysts increased the price target for Dollar Tree stock (NASDAQ: NASDAQ:DLTR) to $100 from $89, maintaining a Buy rating. The adjustment comes amid positive sales trends and the impending sale of Family Dollar, which analysts view as beneficial for Dollar Tree’s performance. According to InvestingPro data, Dollar Tree, currently trading at $90.26 with a market cap of $18.97B, appears undervalued based on its Fair Value analysis.
The analysts observed that Dollar Tree’s sales in the first quarter started strong, faced a slowdown in late March due to Easter comparisons, but then saw significant improvement in late April as Easter purchasing began. Sales trends are reportedly ahead of first-quarter exit rates and surpass both their own and Street estimates for the second quarter. The company has demonstrated solid performance with 4.75% revenue growth over the last twelve months, and seven analysts have recently revised their earnings estimates upward.
The analysts noted that while their Truist Card data is less accurate for Dollar Tree compared to other companies, they believe sales likely met or exceeded their comparable forecast of 3.5%. Despite challenging comparisons in May, with an 11% increase in 2024, the analysts expect these comparisons to ease as the quarter progresses, with June and July comparisons expected at 7% and 6%, respectively.
Dollar Tree shares have already experienced an upward movement since mid-March. The analysts believe that with sales running ahead and comparisons expected to ease, the near-term outlook for the stock remains positive. The new price target is based on a 19x multiple of forward twelve-month earnings estimates, reflecting a roughly 20% discount to the market.
In other recent news, Dollar Tree has seen a series of analyst updates and strategic developments. Wells Fargo (NYSE:WFC) raised its price target for Dollar Tree to $105, maintaining an Overweight rating, citing improved sales and a diminishing impact from Family Dollar operations. They expect Dollar Tree’s earnings to normalize in the mid-$6 range by 2026. CFRA also increased its price target to $92, maintaining a Hold rating, as Dollar Tree prepares to announce its first-quarter results. The company is actively mitigating tariff impacts and expanding its multi-price point strategy, with plans to reach 5,200 locations by the end of the year.
Telsey Advisory Group raised their price target to $95, highlighting Dollar Tree’s strategic initiatives, including the opening of 400 new stores in 2025. They noted the company’s focus on enhancing value and convenience for customers. KeyBanc raised its EPS estimate for Dollar Tree for 2025, reflecting better-than-expected first-quarter performance, despite ongoing tariff challenges. They anticipate net proceeds from the sale of Family Dollar, expected to be finalized in the second quarter of 2025.
Morgan Stanley (NYSE:MS) maintained an Equal-weight rating, expressing caution due to potential tariff impacts on profitability. They expect a slight increase in comparable store sales for the first quarter of 2025 but anticipate a miss in EPS estimates. Despite these challenges, Dollar Tree’s strategic initiatives and analyst upgrades suggest a focus on long-term growth and profitability.
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