Dollar Tree (DLTR) PT Raised to $130 at Bernstein SocGen Group

Bernstein SocGen Group analyst Zhihan Ma raised the price target on Dollar Tree (NASDAQ: DLTR) to $130.00 (from $127.00) while maintaining a Market Perform rating.

The analyst comments "DLTR delivered a beat in Q2 ex tariff refunds. Comp sales grew by 3.7% (vs. consensus of 3.1%), driven by 3.3% ticket growth while traffic growth turned positive (0.4%). Gross margin was 770bps above consensus, including a 680bps benefit from the net impact of tariff refunds. Underlying gross margin expanded by 170bps due to lower tariff rates, shrink recovery, and leverage, partly offset by sales mix. Adj. EBIT margin grew ~900bps, including a 650bps net benefit from tariff refunds. Adj. EPS of $2.70, including a $1.31 benefit from tariff refunds. Excluding the refund benefit, underlying EPS of $1.39 represents a 25c beat. DLTR maintained its top line guidance while raising its EPS guidance for FY26. Management expects net sales of $20.5B - $20.7B (unchanged, vs. cons. $20.66B), comp growth of 3% - 4% (unchanged, vs. cons. 3.3%), and adj. EPS of $7.70 - $8.05 (vs. $6.70 - $7.10 prior, and cons. $7.09). The adj. EPS guide includes a 60c benefit from tariff refunds. Given current momentum, we expect DLTR to achieve the higher end of its FY26 top line guidance and see upside on the margin front as DLTR benefits from lower tariff rates, assuming it doesn't need to reinvest more into pricing, marketing, and/or store conditions. For Q3, DLTR expects 3.0% - 4.0% comp sales growth (vs. cons. 3.5%) and adj. EPS of $0.80 - $0.95 (vs. cons. $1.39, including a 50c headwind from tariff refund reinvestments). We remain on the sidelines given longer term considerations. Near term, it is reasonable to assume that DLTR accelerates traffic growth in H2 against easy comps. Longer term, we wonder if more investments in stores and labor are needed for DLTR to provide a more consistent shopping experience to sustain share gains from higher income customers. Further, DLTR will need to strike a balance between expanding its MPP assortment and maintaining its core fixed price assortment to avoid alienating low income customers.'

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