BofA Securities Offers the Bear Case on Dollar Tree (DLTR), PT to $123
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BofA Securities analyst Robert Ohmes raised the price target on Dollar Tree (NASDAQ: DLTR) to $123.00 (from $120.00) after F1Q EPS of $2.37 was ahead of the $1.85 expectation, driven by strength at the Dollar Tree banner franchise. Comps increased +4.4%, led by a +11.2% Dollar Tree increase, partially offset by a -2.8% decline at Family Dollar. The temporary closure of ~400 stores negatively impacted FDO comps by ~200bps. Comps were led by ticket gains, as traffic at both banners declined 3-4% in F1Q.
The analyst reiterated an Underperform rating, stating "We reiterate our Underperform rating, as we see potential risks to both banners incl.: (1) continued traffic declines at both banners (FDO has reported 9 consecutive quarters of y/y traffic declines while DT has seen declines in 8 of the last 9); (2) potential increased competition with DT from other discount retailers and store concepts at its higher price points (incl. the expansion of its multi-price point assortment); (3) a slower-than -expected FDO recovery as DLTR invests in labor, store & DC conditions, and price to close gaps relative to key competitors; and (4) a potential U.S. consumer recession (see US Economic Weekly) which could pressure discretionary comp sales. Valuation also appears elevated at 17.9x our F23E EPS following today’s ~22% increase (vs. the S&P up ~2%)."
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Create E-mail Alert Related CategoriesAnalyst Comments, Analyst EPS Change, Analyst EPS View, Analyst PT Change
Related EntitiesStandard & Poor's, Robert Ohmes
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