Analyst Zhihan Ma from Bernstein maintained a Hold rating on Dollar Tree (DLTR – Research Report) and keeping the price target at $80.00.
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Zhihan Ma’s rating is based on the potential strategic changes surrounding Dollar Tree’s ownership of Family Dollar. The company is exploring options for Family Dollar, with potential buyers showing interest, yet the outcome remains uncertain. In a scenario where Dollar Tree successfully sells Family Dollar, there is an estimated significant upside, but this relies on convincing buyers of a turnaround potential, which is seen as unlikely.
Conversely, if Dollar Tree retains Family Dollar, it might face a negative impact on its profitability, with the segment potentially continuing to be a financial burden. Additionally, the existing lease liabilities of Family Dollar pose a significant challenge for potential transactions, possibly requiring Dollar Tree to make concessions. These factors contribute to the Hold rating as the future direction and impact on Dollar Tree’s financials remain unclear.
In another report released on February 13, Gordon Haskett Capital Corporation also maintained a Hold rating on the stock with a $80.00 price target.