UPDATE: Citigroup Initiates Coverage On Dollar Tree On Fair Valuation

In a report published Wednesday, Citigroup analyst Alvin C. Concepcion initiated coverage on

with a Neutral rating and $75.00 price target. In the report, Citigroup noted, “We are initiating coverage of DLTR with a Neutral rating and $75 target price, which represents a 10% ETR. As the leading $1 price point retailer, we think DLTR is in a strong position to benefit from a wide variety of customers, particularly value-focused customers. The company has shown strong SSS momentum in recent quarters with a strong margin profile and we expect the 3% SSS growth and 14% EPS growth over the next few years. Additionally, there are solid opportunities to expand margins further, through leveraging SSS growth and increased direct sourcing. That said, we think much of the growth in the underlying business is fairly reflected in the current share price. A successful acquisition/integration of FDO, however, would significantly increase the growth prospects for the company and is the largest near-term upside risk to our Neutral rating (with a FDO shareholder vote on 12/23).” Dollar Tree closed on Tuesday at $68.11.