UBS Reiterates Buy on Dollar Tree (DLTR) Following 3Q - PT to $100

UBS reiterated a Buy rating on Dollar Tree (NASDAQ: DLTR), and raised the price target to $100.00 (from $90.00), following the company's 3Q earnings report. Core DLTR reported better than anticipated sales & OM in 3Q showing it is on steady ground. Its 3Q comp of 1.7% exceeded the consensus estimate and included 80 bps of headwind from rebannering cannibalization.

Analyst Michael Lasser commented, "We think 3Q helped DLTR reinvigorate its investment case DLTR's 3Q results eased a number of fears. First, we believe it demonstrated that the Dollar Store channel can hold its own with WMT price & labor investments, food deflation, & a reduction of SNAP benefits. Second, it served as a reminder of the idiosyncratic opportunity DLTR has ahead of itself. Core DLTR generated accelerating comp & EBIT growth. Further, FDO produced sales that were about as expected in a tough environment, putting the enterprise further down its path to realize what we believe to be well over the $300 mm in synergies that it has guided to previously. We believe this creates a compelling combination that should produce 20%+ EPS growth over the next few years. Yet, the stock still trades at ~19x ’17 EPS, an undemanding valuation in our view."

For an analyst ratings summary and ratings history on Dollar Tree click here. For more ratings news on Dollar Tree click here.

Shares of Dollar Tree closed at $88.68 yesterday.

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