US stocks tumble after Trump threatens 25% tariffs on Japan, S. Korea
On Thursday, Goldman Sachs analysts raised the price target for Dollar Tree (NASDAQ:DLTR) stock to $94 from $86 while maintaining a Sell rating. The adjustment follows Dollar Tree’s recent performance, where its stock closed down approximately 8.4%, contrasting with the S&P 500 index, which remained flat.
The stock decline occurred despite Dollar Tree reporting an earnings beat. Analysts attribute the drop to a less favorable profit outlook for the second quarter and higher than expected tariff costs. Key insights from the earnings report include strong same-store sales in the first quarter, which are expected to continue into the second quarter. Management’s guidance was at the higher end of the 3-5% range. InvestingPro data shows that 8 analysts have recently revised their earnings estimates upward, suggesting growing confidence in the company’s outlook.
Tariff costs emerged as a more negative factor than anticipated, affecting costs of goods sold (COGS) and selling, general, and administrative (SG&A) expenses for the second quarter. Despite these challenges, management has maintained its guidance, expressing confidence in overcoming the profit shortfall.
Goldman Sachs analysts highlighted Dollar Tree’s success with its multi-price point strategy and noted the continued trade down from higher-income customers. This trend is expected to result in stronger top-line performance, leading to the increased price target.
In other recent news, Dollar Tree reported its first-quarter 2025 earnings, surpassing analysts’ expectations with an adjusted earnings per share (EPS) of $1.26, compared to the forecasted $1.21. However, the company faced a revenue shortfall, reporting $4.6 billion against the expected $4.72 billion. Despite this, Dollar Tree saw a 5.4% increase in comparable store sales, indicating strong consumer demand. Telsey Advisory Group responded by raising the price target for Dollar Tree to $100 from $95, maintaining a Market Perform rating, acknowledging the company’s progress in its transformation efforts. Meanwhile, KeyBanc reiterated a Sector Weight rating for Dollar Tree, noting the positive first-quarter performance but expressing concerns over ongoing tariff challenges. Dollar Tree management anticipates second-quarter comparable sales to be at the upper end of the 3-5% full-year guidance but expects a decline in EPS by 45-50% before an anticipated recovery in the latter half of the year. The company continues to focus on its MultiPrice 3.0 store format, which has been implemented in about 3,500 stores and is expected to be in half of all stores by the end of 2025. Additionally, Dollar Tree added approximately 2.6 million new customers in the first quarter, with many from upper-income households, reflecting the brand’s growing appeal.
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