Dollar Tree, Inc. (DLTR) shares experienced a rebound on Thursday, trading higher after a steep drop following the release of its second-quarter financial results. The discount variety store chain reported an adjusted earnings per share (EPS) of $0.67, falling short of the consensus estimate of $1.04 and representing a 26.4% decline year-over-year.
Following the disappointing results, analysts weighed in with their assessments of the company’s future prospects. BMO Capital Markets analyst Kelly Bania downgraded the stock to Market Perform from Outperform, reducing the price forecast to $68 from $130. Bania expressed concerns about potential regulatory and labor cost headwinds impacting 2025, warning of increased competitive pressures and the possibility of tariffs under a 2024 Trump presidency. Additionally, Bania anticipates challenges from stricter Labor Department rules if a Democrat wins the election. These factors led to a revised FY25 EPS estimate of $5.47, down from $6.65.
Truist Securities analyst Scot Ciccarelli maintained a Buy rating but lowered the price forecast to $79 from $140. While acknowledging mounting costs and macroeconomic pressures, Ciccarelli believes that the stock has already factored in these negative developments at its current levels.
KeyBanc Capital Markets analyst Bradley B. Thomas retained an Overweight rating, decreasing the price forecast to $84 from $145. Thomas attributes the company’s performance to widespread soft consumer trends across the industry. Despite acknowledging near-term challenges, Thomas sees potential for self-help initiatives to improve trends. He also sees a potential divestiture of Family Dollar as a positive catalyst, suggesting upside potential in the shares. The analyst reduced the FY24 EPS estimate to $5.40 from $6.70.
Piper Sandler analyst Peter J. Keith reiterated a Neutral rating, lowering the price forecast to $67 from $112. Keith believes that the company’s second-half comparable store sales guidance appears aggressive, assuming an acceleration in sales. He also highlights ongoing risks in 2025 from potential tariffs or changes to the Overtime Rule, suggesting that the issues affecting Dollar Tree extend beyond economic factors.
Despite the mixed analyst opinions, DLTR shares closed Thursday trading up 5.66% at $67.16. The market seems to have responded positively to the company’s recent price action, suggesting a potential turnaround in sentiment. However, the long-term outlook for Dollar Tree remains uncertain, with analysts highlighting various challenges that could impact its future performance.
