Analyst Zhihan Ma from Bernstein maintained a Hold rating on Dollar Tree and increased the price target to $109.00 from $103.00.
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Zhihan Ma has given his Hold rating due to a combination of factors influencing Dollar Tree’s current and future performance. While the company reported better-than-expected Q3 earnings, driven by lower corporate expenses and a slight acceleration in sales, there are concerns about its long-term value proposition in a changing global environment. The company’s updated guidance for FY25 shows a narrowed sales range and an increased EPS forecast, reflecting a cautious optimism. However, the sustainability of these positive results is uncertain as several one-time benefits, such as price increases and competitor closures, may not persist in the coming year.
Additionally, there is apprehension regarding Dollar Tree’s strategic shift in response to tariff pressures, which necessitates moving beyond its traditional fixed price point model. This shift could potentially weaken its competitive advantage and distinct market position. Therefore, despite some positive short-term indicators, the longer-term outlook remains uncertain, justifying the Hold rating.
Ma covers the Consumer Defensive sector, focusing on stocks such as Dollar Tree, Walmart, and Costco. According to TipRanks, Ma has an average return of 4.8% and a 59.32% success rate on recommended stocks.
In another report released today, Piper Sandler also reiterated a Hold rating on the stock with a $114.00 price target.