TSX runs higher on rate cut expectations
On Thursday, UBS analysts reaffirmed their Buy rating for Dollar Tree (NASDAQ:DLTR) stock, setting a price target of $108.00. The analysts highlighted that recent guidance from Dollar Tree has been a source of confusion, which they view as a significant opportunity. According to InvestingPro data, the stock currently trades at $92.54 and appears undervalued based on Fair Value analysis.
Dollar Tree reiterated most components of its fiscal year guidance, but it also disclosed an expected 45-50% decline in second-quarter earnings. This decline is attributed to $70 million in additional costs from tariffs impacting gross margins and $40 million in incremental costs in selling, general, and administrative expenses due to increased labor, with limited explanation provided. Eight analysts have recently revised their earnings estimates downward, as tracked by InvestingPro.
Despite these challenges, Dollar Tree raised its full-year gross margin outlook, anticipating a 50-75 basis point increase. This implies more than a 100 basis point expansion in the second half of the year, considering the first quarter’s achievements and second-quarter guidance.
UBS analysts noted that this situation could create potential downside risk in the latter half of the year. The complexity of the guidance has left some investors questioning the feasibility of Dollar Tree’s targets, according to UBS.
Dollar Tree’s stock is traded on the NASDAQ under the ticker DLTR, and the company’s recent guidance continues to be closely monitored by market participants. Despite near-term challenges, the stock has shown resilience with an 18.25% year-to-date return. For deeper insights into Dollar Tree’s financial health and growth prospects, including 8 additional ProTips and comprehensive analysis, visit InvestingPro.
In other recent news, Dollar Tree has garnered attention following its first-quarter performance, which saw a 5.4% increase in comparable sales. Truist Securities raised its price target for Dollar Tree to $109, maintaining a Buy rating, despite the company lowering its second-quarter earnings guidance due to temporary factors. Piper Sandler also adjusted its price target to $93, retaining a Neutral rating, while noting Dollar Tree’s strategies to mitigate tariff impacts through price adjustments. Loop Capital increased its price target to $85 but expressed concerns about future earnings potential, maintaining a Hold rating.
JPMorgan upgraded Dollar Tree’s stock rating from Neutral to Overweight, raising the price target to $111, citing growth potential and strategic initiatives like the MPP 3.0 format store expansion. BMO Capital also raised its price target to $85, maintaining a Market Perform rating, while highlighting challenges from tariffs and labor costs in the second quarter. Analysts from various firms have noted Dollar Tree’s efforts to counterbalance these challenges with strategic measures and cost management. The pending sale of Family Dollar was mentioned as a positive development, although it could increase exposure to imported merchandise. Overall, these developments reflect a mixed but cautiously optimistic outlook on Dollar Tree’s financial trajectory.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.