Dollar Tree Stock Under Pressure: Why Analysts Are Worried
Jefferies downgraded Dollar Tree due to margin pressure, rising costs (inflation, tariffs), and eroding differentiation, predicting lower 2026 earnings.
- Investment firm Jefferies recently lowered its rating on Dollar Tree (DLTR) to "Underperform" from "Hold," significantly dropping the price target from $110 to $70.
- Jefferies noted that factors like inflation, tariffs, and management decisions have transformed Dollar Tree’s simple business model into a complex one.
- The company is now facing mounting execution risk and margin pressure, which analysts observed through channel checks and pricing analyses.
- Analysts suggest that Dollar Tree’s unique position, or "differentiation," is eroding. The company’s multi-price strategy is now exposed, particularly since Walmart (WMT) is viewed as a cheaper alternative.
- These issues, coupled with macro headwinds, increase pressure on DLTR ahead of its investor day on October 15.
- Jefferies forecasts a downside case for 2026 earnings per share (EPS) of $5.00, which is substantially below the consensus estimate of $6.44.
- Following this downgrade, shares were down 2.3% premarket, reaching $85.65—the lowest level since May 19. However, the median price target across 28 analysts remains higher, at $109.