Dollar Tree Faces Analyst Downgrades

Dollar Tree (NASDAQ:DLTR) faced a wave of downgrades from analysts this week due to financial performance and future prospects concerns.

Recent Downgrades

BMO Capital, Loop Capital, and JPMorgan all cut the stock’s rating, pointing to underwhelming results and a lack of confidence in the company’s outlook.

• BMO Capital downgraded Dollar Tree to Market Perform, reducing its price target to $68. BMO mentioned:

  “We no longer have conviction in the company’s outlook,” citing risks such as flat or negative comparable sales, increased competition, and regulatory headwinds. They speculated that Dollar Tree’s valuation could align more closely with that of drug and grocery retailers, with competitive dynamics potentially worsening and regulatory challenges impacting 2025 prospects.

• Loop Capital lowered its rating from Buy to Hold, decreasing its price target from $170 to $65. They criticized Dollar Tree for consistent earnings disappointments, particularly in Q2, where poor Easter results contributed to the miss. They expressed:

  “We see no reason to believe Dollar Tree’s performance will improve markedly anytime soon,” and mentioned uncertainty regarding the successful disposal of Family Dollar.

• JPMorgan downgraded Dollar Tree to Neutral after a significant Q2 earnings miss, with adjusted EPS at $0.67, far below consensus. They highlighted concerns about reduced full-year guidance and declining same-store sales growth, warning of:

  “core erosion” in profitability and adjusting their FY24 EPS outlook to reflect a conservative view on discretionary sales.

Conclusion

The downgrades from major investment firms signal growing concerns about Dollar Tree’s financial health and market position, with expectations of continued challenges ahead.