On Thursday, BMO Capital Markets maintained its Outperform rating on Dollarama Inc. (DOL:CN) (OTC: DLMAF), with a steady price target of Cdn$133.00. The firm's analysis suggests that the recent decline in Dollarama's stock value stems from a mix of factors. These include results from Canada that met expectations, the stock's year-to-date performance, and the announcement of Mexico as the next market for Dollarcity's expansion.
The report indicates that some Dollarama shareholders are apprehensive about the company's expansion into new markets. Dollarama's shares are currently valued at 17.5 times BMO's projected fiscal year 2026 EBITDA, which falls within the historical valuation range of 15 to 18 times.
Despite the recent strong performance of Dollarama's stock, BMO Capital suggests that the stock may experience a period of sideways trading in the near term. However, the firm emphasizes that the company's fundamentals are solid, and it remains positive about Dollarama's business prospects.
BMO Capital's commentary reflects an expectation that Dollarama will continue to perform well, although it acknowledges the potential for short-term fluctuations in the stock's trading pattern. The price target of Cdn$133.00 indicates confidence in the company's continued success and growth potential.
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