Cautious Outlook: Dollar Tree Faces Earnings Pressure Amid Tariff and Labor Cost Challenges

Analyst Robert Ohmes of Bank of America Securities reiterated a Sell rating on Dollar Tree (DLTR – Research Report), retaining the price target of $70.00.

Robert Ohmes has given his Sell rating due to a combination of factors impacting Dollar Tree’s financial outlook. Despite a strong first quarter performance with adjusted earnings per share and same-store sales exceeding expectations, the company faces significant challenges ahead. The anticipated increase in tariff and labor costs is expected to pressure the second quarter earnings, with a potential decline in EPS by as much as 45-50% year-over-year.
Additionally, while Dollar Tree has raised its full-year earnings guidance, there are concerns about the risks associated with its multi-price rollout. These include increased store complexity, uncertainty in year-over-year performance of in-line stores, and the potential competitive response as the company expands into higher price point items. As a result, Robert Ohmes maintains a cautious stance, reiterating an Underperform rating with a price objective of $70, reflecting these expense risks and uncertainties.

Ohmes covers the Consumer Cyclical sector, focusing on stocks such as Dollar General, O’Reilly Auto, and AutoZone. According to TipRanks, Ohmes has an average return of 9.1% and a 59.01% success rate on recommended stocks.