Sell Rating on Dollar Tree Due to Tariff Risks and Profitability Challenges

Dollar Tree (DLTR – Research Report), the Consumer Cyclical sector company, was revisited by a Wall Street analyst today. Analyst Robert Ohmes from Bank of America Securities reiterated a Sell rating on the stock and has a $70.00 price target.

Robert Ohmes has given his Sell rating due to a combination of factors impacting Dollar Tree’s financial outlook. One of the primary concerns is the elevated risk from tariffs, particularly the 10% tariff on Chinese imports, which significantly affects Dollar Tree as approximately 40% of its retail value purchases are direct imports from China. This tariff, along with other expenses, has led to a reduction in the earnings per share estimate for fiscal 2026 to the lower end of Dollar Tree’s guidance range.
Additionally, while Dollar Tree has strategies to mitigate these tariff impacts, such as supplier negotiations and price adjustments, there are risks associated with these measures. The complexity of operations and potential labor cost increases pose further challenges. Moreover, the expansion into multi-price formats carries risks related to expense pressures and competitive responses. These factors contribute to the underperformance rating, with a lowered price objective of $70, reflecting the anticipated challenges in maintaining profitability and growth.

Ohmes covers the Consumer Cyclical sector, focusing on stocks such as O’Reilly Auto, AutoZone, and Best Buy Co. According to TipRanks, Ohmes has an average return of 9.1% and a 57.78% success rate on recommended stocks.