Market Overview

Analyst: Dollar Tree Is 'One Of The Most Defensible Retail Concepts'

Analyst: Dollar Tree Is 'One Of The Most Defensible Retail Concepts'

Dollar Tree, Inc. (NASDAQ: DLTR) was upgraded by Bernstein Monday after analysts at the firm changed their viewpoint on the discount retailer and said they may have hesitated too long.

While Dollar Tree is a “great retailer,” Bernstein initiated the company at Underperform due to concerns about Family Dollar, which the firm viewed as “far more challenging to fix than most investors realized,” analyst Brandon Fletcher said in a note.

Dollar Tree bought Family Dollar in a $9.1-billion acquisition deal in 2015.

Family Dollar has work left to do on assortment, layout and inventory, but Dollar Tree is strong enough to carry the stock even if Family Dollar weakens, Fletcher said (see his track record here).

“Clearly, we got too cute and missed the right time to pivot.”

Bernstein upgraded Dollar Tree from Underperform to Market-Perform and raised its target price from $65 to $78.

The retailer reported a second-quarter EPS of 98 cents against an 87-cent estimate and sales of $5.28 billion versus a $5.24 billion estimate before the open on Aug. 24. Dollar Tree same-store sales were up 3.9 percent and Family Dollar sales increased by 1 percent.

Alone At The $1 Price Point

Dollar Tree is in fact a Lebanese cedar, Fletcher said: One that “lives for a long time, grows in tough conditions and can widen its reach on price points over time.”

The retailer’s standalone value has grown, and its subsidiary Family Dollar had a good quarter and could have a more compelling upside story within one to two years, the analyst said.

Dollar Tree’s model of selling everything for $1 leaves it with little to no major competition and “largely immune” from, Inc. (NASDAQ: AMZN), since the cost of shipping is prohibitive, Fletcher said.

“In our view, the Dollar Tree banner is one of the most defensible retail concepts, period.”

Related Links: 

Will Dollar Tree Ever Get Some Value Out Of Its Family Dollar Acquisition?

Analyst Puts Dollar Tree's Family Dollar Stores On Amazon Radar

Latest Ratings for DLTR

Aug 2020Morgan StanleyMaintainsEqual-Weight
Aug 2020Credit SuisseAssumesOutperform
Jul 2020B of A SecuritiesUpgradesNeutralBuy

View More Analyst Ratings for DLTR
View the Latest Analyst Ratings


Related Articles (DLTR)

View Comments and Join the Discussion!

Posted-In: AmazonAnalyst Color Earnings News Upgrades Price Target Analyst Ratings Trading Ideas Best of Benzinga

Latest Ratings

JBLRBC CapitalMaintains38.0
COSTRBC CapitalMaintains412.0
COSTMKM PartnersMaintains325.0
MTNTruist SecuritiesMaintains243.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at