Analysts at Citi and BofA released positive commentary on Dollar Tree (NASDAQ:DLTR) Thursday, following the company's analyst day.
Citi analysts maintained a Buy rating and $167 price target on the stock, stating the discount retailer put together a "credible outline" for its long-term growth potential and what it can achieve in 2026.
"We come away thinking the $10+ EPS target is credible, and the underlying assumptions to get there don't seem like a stretch," they wrote. "There are signs early strategic moves are already working to drive traffic/mkt share gains, and mgmt reiterated 2Q guidance and commented that they are seeing cont'd momentum in 2Q (especially at DT). We believe the analyst day helped give credibility to the turnaround story."
BofA analysts raised the firm's price target on the stock to $130 from $109, maintaining an Underperform rating.
They said merchandising, IT, supply chain, and culture initiatives support the company's outlook.
"DLTR has set up for an accelerating ramp to its $10+ EPS target in F27/C26 as it benefits from: 1) breaking the $1 price point at Dollar Tree (DT), 2) moving Family Dollar (FDO) to price parity with its #1 competitor and adjusting the SKU base towards traffic-driving items (e.g. adult bev.), 3) IT, supply chain, and culture investments/initiatives. Visibility is supported by a management team that has 'been there, done that' given experience brought from DG," they stated.
Despite the positives, BofA maintained its Underperform rating as they see several risks "including: 1) Elevated SG&A expense growth vs. historical levels, 2) Competitive response to both divisions’ initiatives, 3) Continued mix shift pressure as consumables grow at a faster rate near-term."