Truist Reiterates Buy Rating on Dollar Tree Ahead of Solid Fourth Quarter

Truist Securities reiterated its Buy rating and $156 price target on Dollar Tree (NASDAQ:DLTR).

The firm expects the company to deliver a solid fourth quarter, with sales likely finishing roughly in line with its recently raised comparable sales estimate of 5.5%. Truist said its proprietary card data indicates that first-quarter performance has also tracked broadly in line with expectations so far.

According to the analyst, some of the slowdown in customer traffic seen in the third quarter — which declined by about 30 basis points — may have been linked to the retailer’s shift toward larger product sizes. For example, customers may have opted for a $5 bottle of Gain detergent instead of purchasing multiple $1.25 items.

Further analysis of Truist’s card data suggested somewhat weaker relative outperformance among higher-income consumers compared with competitors such as Dollar General.

Despite acknowledging that the company faces a high execution bar, Truist said it remains positive on Dollar Tree due to what it views as significant earnings growth potential over the next several years.