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UPDATE: J.P. Morgan Raises PT on Dollar Tree on Hard-To-Beat Profile

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In a report published Tuesday, J.P. Morgan analyst Matthew R. Boss reiterated an Overweight rating on Dollar Tree (NASDAQ: DLTR), and raised the price target from $45.00 to $52.00.

In the report, Boss noted, “DLTR remains our low-end 'horseman' with a profile that is hard to beat in our view: (1) High-single-digit sq ft growth (~9 years to US saturation), (2) 3.0% underlying core comp build, (3) gross margin stability w/ ~50% of goods manufactured direct (i.e. private label), (4) 1-2% SG&A fixed cost hurdle, and (5) under-leveraged balance sheet (~2.6x debt/Ebitdar). While the low-end macro backdrop remains choppy, we think organic traffic (~80% of comp trailing 8 Q's) is the key, with average ticket the next leg given DLTR's higher income “core” household income (~$60K). Longer-term, we see incremental global opportunities for the Tree with Canada reaching an inflection (140 stores today with 1,000 stores goal/infrastructure built) and Dollarama moving into Latin America (first dollar concept entrant / similar operating model).”

Dollar Tree closed on Monday at $48.70.

Latest Ratings for DLTR

DateFirmActionFromTo
Dec 2014Deutsche BankDowngradesBuyHold
Dec 2014CitigroupInitiates Coverage onNeutral
Nov 2014BarclaysMaintainsOverweight

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