What Happened?
Shares of discount treasure-hunt retailer Dollar Tree (NASDAQ:DLTR) jumped 3% in the pre-market session after the company received bullish updates from Wall Street analysts at Barclays and JPMorgan.
Barclays upgraded the discount retailer to "Overweight" from "Equal Weight" and significantly raised its price target to $120 from $95. The firm cited a "cleaner growth story" following the sale of Family Dollar and noted that strong sales momentum from the first quarter has continued. Barclays anticipates Dollar Tree will benefit from consumers trading down to more economical options and from the closure of competitor stores. Adding to the positive sentiment, JPMorgan maintained its "Overweight" rating and boosted its price target on the stock to $138 from $111. The firm's analyst expressed an optimistic outlook on the company's potential for growth. These upgrades suggest growing confidence on Wall Street in Dollar Tree's strategic direction and future performance.
After the initial pop the shares cooled down to $113.19, up 2.8% from previous close.
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What Is The Market Telling Us
Dollar Tree’s shares are quite volatile and have had 19 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 11 months ago when the stock dropped 20.4% on the news that the company reported weak second-quarter earnings. Its revenue and EPS missed analysts' expectations, and it lowered its full-year revenue guidance. The company noted that the unfavorable macro environment affected the purchasing behavior of middle- and higher-income customers and this played a role in the decision to revise the financial forecasts. Overall, this was a weaker quarter.
Dollar Tree is up 48% since the beginning of the year, and at $113.19 per share, has set a new 52-week high. Investors who bought $1,000 worth of Dollar Tree’s shares 5 years ago would now be looking at an investment worth $1,178.
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