Analysts and investors cheered news that Dollar Tree (DLTR) plans to offload its troubled Family Dollar business, sending shares rocketing up 10% on Thursday. The decision to sell the Family Dollar business for $1 billion ends a decade-long effort to find a fit for the discount chain, which DLTR bought for $9 billion in 2015.
Sale of Family Dollar is “Game Changer“
Loop Capital said the announcement of an agreement to sell long-time albatross Family Dollar is a “game changer” for the stock. The sale, analysts at the firm said, not only rids Dollar Tree of a money-losing distraction but places it back squarely as pureplay, single-price-point retailer with limited direct competition.
Loop kept a Hold rating and $75 price target on Dollar Tree, noting that management has had a rocky record of meeting consensus expectations of late.
Other analysts were more upbeat and prepared to raise forecasts. Truist raised the firm’s price target on Dollar Tree to $84 from $76 and kept a Buy rating on the shares after its Q4 earnings beat. The company’s Family Dollar sale is a “win,” and its sales momentum is “solid”. Big picture-wise, Truist is upbeat and notes that expectations for 3%-5% comparable sales growth is a “better rate than most.”
Evercore ISI meanwhile raised DLTR to $85 from $79 and kept an In Line rating on the shares after the company announced the “much-anticipated” sale of its Family Dollar business. Evercore hailed its “solid efforts to mitigate at least the first round of tariff announcements.” However, it notes that the $1 billio price tag for Family Dollar was at the low end of the $1-$3 billion anticipated.
Not everyone was impressed though as JPMorgan lowered its price target on Dollar Tree to $78 from $88 and kept a Neutral rating on the shares following the Q4 report.
Is DLTR a Good Stock to Buy?
Following the earnings report, Wall Street has a Hold consensus rating on the stock, based on four Buys, seven Holds and one Sell. The average DLTR price target of $81.75 implies about 7% upside.
