Does The Street Still Like Dollar Tree Stores?

reported adj. 4Q14 EPS of $1.16, $0.01 higher than consensus and comps of +5.5% versus consensus of +4.8%. Robust discretionary product sales helped the company's gross margins, which rose 20% bps y/y. Analysts at Jefferies maintained a Hold rating, while raising the price target from $60 to $74. The company seems to be "enjoying macro and merchandising tailwinds, which are translating to better comp sales, the report said. Dollar Tree's share price already reflects benefits from synergies from the merger with

, which is still pending FTC approval. Analyst Meredith Adler at Barclays, meanwhile, maintained an Overweight rating and the price target of $98. "The primary driver of DLTR's stock right now is the pending acquisition of Family Dollar and investors' confidence that it can be made more productive and profitable. We think the interest in the actual earnings at DLTR, comes mostly from what it signals about the ability of DLTR's management to turn FDO around," Adler wrote. The adj. EPS estimate for 1Q15 was reduced by $0.07 to $0.72. Stifel downgraded Dollar Tree to Hold, after the company's share price reached the price target of $80 intraday. In the report, Stifel noted, "DLTR soon enters a period of heightened risks and potential operational, strategic, and financial frictions. Integrating a company with more stores, more full-time employees, more distribution centers, and more revenue than DLTR itself is a complex task." "It's not unreasonable to expect some bumps along the way. That's fine with us (the deal should be good for DLTR long term), but at the current valuation, such frictions may provide a more attractive buying opportunity over the next 4-8 quarters," the analysts added.