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On Monday, Wells Fargo (NYSE:WFC) analysts increased the price target for Dollar Tree stock (NASDAQ: NASDAQ:DLTR) to $105 from $90, while maintaining an Overweight rating. Currently trading at $90.26, InvestingPro analysis suggests the stock is undervalued. The analysts anticipate continued positive momentum for Dollar Tree, citing factors such as improved comparative sales and a diminishing impact from Family Dollar operations, with the stock showing impressive momentum through a 24% gain over the past six months.
The analysts noted that Dollar Tree’s ability to sustain its current margin structure despite tariff challenges is a positive sign for the company’s financial health. With a P/E ratio of 18.75 and annual revenue of $17.58 billion, they also highlighted the potential for Dollar Tree to evolve into a high single-digit to low double-digit earnings growth company. Seven analysts have recently revised their earnings estimates upward, according to InvestingPro data.
The decision to raise the price target reflects Wells Fargo’s confidence in Dollar Tree’s future performance, driven by its strategic initiatives and market conditions. The analysts expect Dollar Tree to achieve more normalized earnings in the mid-$6 range by 2026.
Overall, Wells Fargo’s analysis suggests a favorable outlook for Dollar Tree, supported by ongoing share repurchases and operational improvements.
In other recent news, Dollar Tree has been the focus of several analyst updates and strategic moves. CFRA analyst Arun Sundaram raised the 12-month price target for Dollar Tree to $92, citing the company’s efforts to manage tariff risks and its decision to divest the underperforming Family Dollar segment. Telsey Advisory Group also increased its price target for Dollar Tree to $95, highlighting the company’s strategic initiatives like opening new stores and enhancing customer experience through technology investments. KeyBanc Capital Markets noted Dollar Tree’s recent price hikes from $1.25 to $2.00 on certain items and raised its EPS estimate for 2025 to $4.65, reflecting strong first-quarter performance despite tariff challenges.
Morgan Stanley (NYSE:MS) maintained an Equal-weight rating, expressing caution over potential tariff impacts on Dollar Tree’s profitability, while anticipating a comparable store sales increase of around 4% for the first quarter of 2025. The firm noted that the company might miss EPS estimates for the quarter, which could affect its full-year guidance. Additionally, Dollar Tree announced Duncan MacNaughton as the future Chairman and CEO of Family Dollar, in preparation for its transition to an independent company. This move is part of the planned divestiture of Family Dollar, expected to finalize in the second quarter of 2025. These developments reflect Dollar Tree’s strategic adjustments amid ongoing market challenges.
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