Dollar Tree upgraded on earnings upside potential despite ongoing traffic woes

Investing.com -- Dollar Tree (NASDAQ: DLTR) received a pair of analyst upgrades on Wednesday, with brokerages pointing to improving consumer sentiment, tariff-related tailwinds and a stronger earnings outlook, even as store traffic remains under pressure.

Raymond James upgraded the discount retailer to Outperform from Market Perform and set a $140 price target, arguing that the company’s fiscal 2026 guidance appears conservative and does not account for potential benefits from tariff refunds, lower fuel costs or additional share repurchases. The brokerage said improving operational execution, easing cost headwinds and the prospect of positive traffic trends in the second half of the year create multiple avenues for earnings upside.

The firm noted Dollar Tree has already received $110 million in tariff refunds and could ultimately receive several hundred million dollars during fiscal 2026. While management is expected to reinvest much of the proceeds, Raymond James believes the funds could support pricing, marketing and store investments that help drive customer traffic and sales growth.

Separately, Goldman Sachs upgraded Dollar Tree to Neutral from Sell and raised its price target to $125 from $105. The bank cited improving consumer perceptions of the retailer’s pricing and value proposition, supported by data showing sentiment metrics have recovered from lows reached earlier this year.

However, Goldman Sachs remained cautious, noting that traffic trends remain negative and that the stock already reflects expectations for an eventual recovery. The bank said Dollar Tree’s most frequent shoppers continue to show weaker engagement than historical levels, while competition from rivals such as Walmart, Dollar General and Five Below remains intense.

Both firms highlighted Dollar Tree’s strong cash position and recent $500 million share repurchase as additional positives, though they differ on how much of the anticipated operational improvement is already reflected in the stock price.

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