UPDATE: Deutsche Bank Reiterates Buy Rating, Raises PT on Dollar Tree Ahead of Annual Investor Day

In a report published Wednesday, Deutsche Bank analyst Greg Poole reiterated a Buy rating on Dollar Tree DLTR, and raised the price target from $60.00 to $62.00. In the report, Deutsche Bank noted, “After the close this evening, and ahead of its annual Investor Day tomorrow at its company headquarters in Virginia, Dollar Tree announced a new $2 billion share repurchase authorization (which replaces its prior plan), including a $1 billion Accelerated Share Repurchase (ASR) program, that will be partially funded by cash on hand ($250 million) as well as $750 million in Senior Notes. We have 3 quick takeaways: (1) while a key tenet of our recent upgrade was the expectation of an acceleration in DLTR's buyback cadence, the use of an ASR is a welcomed surprise; (2) the size of the ASR was well ahead of our expectations (we were modeling $285 million of buybacks in 2H13; and (3) the announcement suggest that 3Q SSS trends (guidance of low to mid single digits) are off to a solid start (we are comfortably modeling 4.3%). We continue to believe DLTR is well positioned near-term, and that improving traffic/SSS (facing easier compares in 2H), a long runway for store growth, as well as impressive FCF generation continues to make the stock an attractive long at current levels.” Dollar Tree closed on Tuesday at $55.83.
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Posted In: Analyst ColorPrice TargetAnalyst RatingsDeutsche BankGreg Poole
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