Hold Rating for Dollar Tree Amid Strong Sales and Tariff Challenges

Dollar Tree (DLTR – Research Report), the Consumer Cyclical sector company, was revisited by a Wall Street analyst yesterday. Analyst Kelly Bania from BMO Capital maintained a Hold rating on the stock and has a $85.00 price target.

Kelly Bania’s rating is based on a combination of factors that reflect both positive and challenging aspects of Dollar Tree’s current financial situation. On the positive side, Dollar Tree has demonstrated strong comparable sales momentum in the first quarter, and management has increased earnings per share guidance due to substantial share repurchases. However, the company faces significant challenges, particularly with incremental costs arising from tariffs and labor, which are expected to impact the second quarter’s profitability.
Despite management’s plans to offset these costs in the second half of the year, there remains uncertainty around their tariff mitigation strategies, which could potentially affect the quality of merchandising in the long term. Additionally, while the target price has been adjusted upwards, Dollar Tree is still perceived to be at a disadvantage compared to its peers due to the lack of a comprehensive digital strategy and the ongoing uncertainty related to tariffs. These factors contribute to the Hold rating, as the potential risks and uncertainties balance out the positive aspects of the company’s performance.

In another report released today, Morgan Stanley also maintained a Hold rating on the stock with a $96.00 price target.

DLTR’s price has also changed moderately for the past six months – from $73.830 to $88.620, which is a 20.03% increase.