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Wells Fargo Upgrades Dollar Tree (DLTR) in Broad Dollar Store Endorsement

October 10, 2012 8:14 AM EDT Send to a Friend
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Price: $53.63 --0%

Rating Summary:
    11 Buy, 11 Hold, 0 Sell

Rating Trend: Down Down

Today's Overall Ratings:
    Up: 0 | Down: 0 | New: 0
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Wells Fargo upgraded Dollar Tree (NASDAQ: DLTR) from Market Perform to Outperform with a price target of $56 to $58 (from $52 to $55).

Analysts said they continue to like the dollar stores for their low prices, convenient locations, solid square footage/ earnings growth, and relative immunity from Amazon (Nasdaq: AMZN).

"Our favorite name is Dollar General (NYSE: DG), given its combination of top-line and margin opportunities and strong track record," said analyst Matt Nemer.

Regarding Dollar Tree (Nasdaq: DLTR) Nemer said "We expect solid comps to continue driven by stable consumables and discretionary sales, the continued rollout of coolers/freezers over the next three years, and a potential lift from a new policy to accept manufacturer's coupons."

He also expect stable gross margins going and incremental growth opportunities like Deal$, Canadian expansion, and eCommerce.

"Shares of DLTR have declined 13.6% over the last 90 days vs. the S&P up 6.6%, and valuation looks compelling at 15.9x FY2013E vs. a group of similar growth peers at 17.0x. Additionally, there could be potential upside to Street estimates for Q4 2012 given guidance doesn't assume any share repurchase activity," said Nemer.

For an analyst ratings summary and ratings history on Dollar Tree click here. For more ratings news on Dollar Tree click here.

Shares of Dollar Tree closed at $45.79 yesterday.




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