On Thursday, BMO Capital Markets adjusted its outlook on shares of Dollar Tree (NASDAQ:DLTR), increasing the price target from $65.00 to $70.00 while maintaining a Market Perform rating on the stock.
According to InvestingPro analysis, Dollar Tree appears undervalued at its current market price of $72.35. The update follows Dollar Tree's third-quarter fiscal year 2025 results, which aligned with expectations and provided a break from the pattern of recent downward revisions and earnings misses.
Dollar Tree's shares experienced a slight boost due to the company's third-quarter performance, which met analysts' projections. The stock, with a market capitalization of $15.46 billion, has faced significant headwinds, declining 35.45% over the past six months.
Despite this, the company observed a decline in comparable store sales in November across both of its store banners. Moreover, the positive impact from Dollar Tree's multi-line conversions on comparable sales also showed a sequential decrease.
The analyst noted that the estimated earnings per share (EPS) for fiscal year 2025 are trending down by a low single-digit percentage year over year. InvestingPro data shows management has been aggressively buying back shares, with analysts forecasting EPS of $5.39 for FY2025. This projection is consistent with the company's average EPS of over $5.30 in recent years, excluding fiscal year 2023.
BMO Capital forecasts a modest improvement in fiscal year 2026, but also recognizes that several headwinds from fiscal year 2025 could obscure the outlook for the following year. Discover 5 more exclusive insights and detailed financial analysis with an InvestingPro subscription.
The maintained Market Perform rating reflects a cautious stance on the stock, with the revised price target of $70 indicating a slight optimism based on the company's current performance trajectory. The company maintains a FAIR overall financial health score according to InvestingPro metrics.
The analyst's statement concluded with an acknowledgment of the potential for modest improvement looking ahead, despite the challenges that may persist from the current fiscal year.
In other recent news, Dollar Tree has seen adjustments in stock price targets from several analyst firms following its third-quarter earnings release.
Loop Capital raised its price target to $75, maintaining a Hold rating, while Truist Securities increased its target to $83, keeping a Buy rating. Jefferies also raised its price target from $70 to $75, maintaining a Hold rating. These adjustments come after Dollar Tree's third-quarter performance, which included a notable growth in the Family Dollar segment and an anticipated positive earnings for the coming year.
In addition, the company has been undergoing a strategic review of the Family Dollar segment, which has shown signs of improvement. Despite this, some analysts express skepticism about the significant impact of these improvements on the company's trajectory.
Furthermore, Dollar Tree announced the immediate resignation of board member Winne Y. Park, leading to a reduction in the board's size. No further information has been provided regarding a replacement for Park or any additional changes to the board's composition.
These are among the recent developments at Dollar Tree, reflecting a period of transition and strategic adjustments for the company.
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