Discount retailer Dollar Tree, Inc (NASDAQ:DLTR) beat analyst estimates for third-quarter earnings per share and revenue and provided updated guidance. Analysts see more upside for shares, which hit new 52-week highs Thursday.
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The Dollar Tree Analysts: Guggenheim analyst John Heinbockel maintained a Buy rating on Dollar Tree and raised the price target from $125 to $130.
JPMorgan analyst Matthew Boss maintained an Overweight rating and increased the price target from $113 to $140.
Telsey analyst Joseph Feldman maintained an Outperform rating and increased the price target from $130 to $135.
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Guggenheim on DLTR: Dollar Tree beating third-quarter estimates and raising guidance was "unexpected," Heinbockel said in a new investor note.
The analyst said investors were pleased with guidance and brushed off signs of soft volume and traffic trends.
"Contrary to our expectations, the company delivered a meaningful, gross margin-driven 3Q bottom-line beat accompanied by a full-year raise suggesting an even stronger 4Q performance," Heinbockel said.
The analyst said results show strong momentum in the final weeks of the quarter, with a strong Halloween.
"Traffic and volume have been ‘hot button' issues among investors, fearing that too much pricing has been taken, especially with the tariff-related jump to $1.50 from $1.25."
The analyst said traffic was negative in the quarter and unit share gains for consumables declined.
"That said, management believes that some of this pressure is temporary, attributable to the re-stickering disruption."
JPMorgan on DLTR: Sector sales was one of the key highlights from the earnings report for Boss.
The analyst said discretionary comps up 4.8% were higher than the consumables category comp of 3.5%, which marked the first time discretionary outpaced consumables since the first fiscal quarter of 2022.
Boss also highlighted the retailer adding three million new households as customers in the third quarter, with high growth among higher income consumers.
"Management cited October finished the quarter with traffic strengthening, multi-price-point momentum, and an ‘all-time record' Halloween," Boss said.
Telsey on DLTR: The retailer's multi-price point strategy is "gaining traction," Feldman said in a new investor note.
The analyst said third-quarter results showed a strong response to the price points across all income groups, including high-income earners.
"Dollar Tree's focus on increasing the frequency of higher-income households by offering more relevant merchandise, better service level, and sharper-looking stores should help gain a greater share of wallet among this cohort over the next few years," Feldman said.
Highlighting the multi-price point benefits, Feldman said Halloween 2025 items generated around 25% more profit dollars than in 2022, according to the company. This came despite selling 10% fewer units during the season.
"We remain encouraged by Dollar Tree's transformation, which is focused on enhancing value, convenience, and discovery."
The analyst said the company's strategic plan will lead to higher earnings per share growth, which along with share buybacks and a potential dividend could mean "an attractive total return for shareholders."
DLTR Price Action: Dollar Tree shares are up 1.97% to $115.15 on Thursday. Shares hit new 52-week highs of $119.21 earlier in the intraday trading session. Dollar Tree shares are up 53.2% year-to-date.
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