Dollar Tree’s Strong Sales Growth Balanced by Margin Risks: Hold Rating Maintained

Morgan Stanley analyst Simeon Gutman maintained a Hold rating on Dollar Tree (DLTR – Research Report) today and set a price target of $96.00.

Simeon Gutman has given his Hold rating due to a combination of factors impacting Dollar Tree’s financial outlook. The company’s top-line growth in the first quarter of 2025 has been impressive, with both traffic and ticket sales showing positive acceleration. This indicates that Dollar Tree’s value proposition is resonating well with consumers, and there is potential for this momentum to continue throughout the year.
However, Gutman also notes that the implied margin guidance for the second half of 2025 presents some risks. While the gross margin is expected to expand, the upfront impact of tariffs and the associated costs pose challenges. The company faces significant pricing and freight costs, and while there is potential for margin improvement, the uncertainties around these factors contribute to the Hold rating. The balance between strong sales performance and the risks associated with margin expansion is central to Gutman’s recommendation.

According to TipRanks, Gutman is a 4-star analyst with an average return of 2.8% and a 60.56% success rate. Gutman covers the Consumer Cyclical sector, focusing on stocks such as Ulta Beauty, Dick’s Sporting Goods, and Dollar General.

In another report released yesterday, Telsey Advisory also maintained a Hold rating on the stock with a $95.00 price target.