BMO Capital raises Dollar Tree stock price target to $85

On Thursday, BMO Capital analysts increased the price target for Dollar Tree (NASDAQ:DLTR) stock to $85 from a previous target of $80, maintaining their Market Perform rating. The decision follows Dollar Tree’s strong first-quarter comparable sales momentum and an upward revision in earnings per share guidance, attributed to increased share repurchases. According to InvestingPro data, the stock has shown impressive momentum with a 22% gain over the past six months, though current analysis suggests the stock may be approaching overbought territory.

Analysts noted that while the first quarter showed positive trends, the second quarter faces challenges from additional tariff and labor costs. Dollar Tree management anticipates a significant improvement in profitability in the second half of the year, aiming to counterbalance these costs. The company, currently valued at $18.62 billion, maintains a P/E ratio of 19.08x, with eight analysts recently revising their earnings expectations upward.

The analysts emphasized that despite the raised price target, they are maintaining a Market Perform rating. They expressed concerns about the potential long-term impact on merchandising quality due to unclear strategies for mitigating tariffs. InvestingPro subscribers can access 10+ additional exclusive insights and a comprehensive analysis of Dollar Tree’s financial health, which currently rates as "FAIR" based on multiple factors.

Dollar Tree’s management has indicated plans to enhance profitability in the latter half of the year, which influenced the adjusted price target. The company’s approach to managing incremental costs remains under scrutiny by BMO Capital.

The updated price target reflects the incorporation of higher share buybacks and slightly revised earnings projections, according to the analysts.

In other recent news, Dollar Tree’s first-quarter performance has caught the attention of several major analyst firms. The company reported a 5.4% increase in comparable sales, exceeding expectations and driven by strong performance in both consumables and discretionary categories. This positive result has led analysts to adjust their projections and price targets for the company. Morgan Stanley increased its price target from $80 to $96, citing strong first-quarter results and raising its earnings per share (EPS) estimates for 2025 and 2026. Meanwhile, Goldman Sachs raised its price target to $94, despite maintaining a Sell rating, acknowledging Dollar Tree’s strong same-store sales and multi-price point strategy.

Wells Fargo reiterated its Overweight rating with a price target of $105, expressing confidence in Dollar Tree’s long-term prospects despite current market volatility. KeyBanc maintained a Sector Weight rating, recognizing the company’s strong first-quarter results but noting ongoing challenges related to tariffs. Telsey also raised its price target to $100, highlighting Dollar Tree’s transformation progress and improved operating margin. These recent developments reflect Dollar Tree’s ability to navigate market challenges while continuing to capture consumer interest and drive sales growth.

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