Dollar Tree (DLTR) PT Lowered to $155 at Telsey

Telsey analyst Joseph Feldman lowered the price target on Dollar Tree (NASDAQ: DLTR) to $155.00 (from $160.00) while maintaining a Outperform rating.

The analyst comments "Dollar Tree reported mixed 1Q24 earnings, with inline operating margin and EPS, but softer sales, especially at the core Dollar Tree related to weak Easter discretionary sales (~150 bps headwind to the segment comp) and unfavorable (cold/wet) weather. Furthermore, the company lowered its 2Q24 and 2024 guidance, entirely due to incremental transportation and other expenses related to the loss of the Marietta, OK distribution center (DC), which was destroyed by a tornado on April 28. Excluding the unusual Marietta DC expenses, the 2024 guidance is unchanged, and the 2Q24 outlook would have met the FactSet (FS) consensus. We were surprised by the announcement the company is considering strategic alternatives for Family Dollar. While we knew Family Dollar has been struggling to improve operating performance, we were under the impression CEO Rick Dreiling and his new management team were particularly well-suited to turn around the segment based on their past success leading Dollar General (DG; Outperform; PT=$168) and other retailers. It seems core Dollar Tree and Family Dollar continue to operate separately and their different growth trajectories/life cycles warrant more direct attention. Our initial work on a separation suggests core Dollar Tree is likely worth more alone than the current combined company."

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