Piper Jaffray Remains Sidelined on Dollar Tree (DLTR) Following 2Q Comp Miss
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Piper Jaffray maintained a Neutral rating on Dollar Tree (NASDAQ: DLTR), and cut the price target to $85.00 (from $87.00), following the company's 2Q earnings report. DLTR missed comps with 1.2% coming in below 2.5% estimates. Management noted cannibalization from the Deal$ and FDO store re-bannering to DLTR was a -80 bps headwind to comp.
Analyst Peter Keith commented, "We are maintaining our Neutral rating on DLTR and lowering our PT slightly to $85 on our revised estimates following the Q2 print, which saw a slight miss on both comp and EPS. At a minimum, the Q2 print showed that neither the DLTR nor the FDO segments are immune from various pressures in the marketplace (SNAP reductions, food price deflation, and competitive pressures). These dynamics were not quantified, but both segment comps stepped down from prior quarters. Going forward, core DLTR should be less impacted by these dynamics, but we are less optimistic about the FDO comp improving. The merger synergy and cash flow dynamics at DLTR remain intriguing, and valuation has now reset to a more reasonable level, in our view. We would like to see more improvement in sales trends at FDO stores to become more positive on DLTR shares. We are adjusting down 2016 and 2017 estimates modestly."
Shares of Dollar Tree closed at $85.50 yesterday.
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Create E-mail Alert Related CategoriesAnalyst Comments, Analyst EPS Change, Analyst EPS View, Analyst PT Change
Related EntitiesPiper Jaffray, Earnings, Definitive Agreement
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