April 7 - Shares of Dollar Tree (DLTR, Financial) jumped around 6% on Monday after the opening bell as Citi (C, Financial) upgraded the stock from "Neutral" to "Buy", pointing to the company's ability to raise prices amid rising tariffs. Analyst Paul Lejuez believes Dollar Tree can increase its prices from $1.25 to $1.75 without much pushback, calling the move “inevitable” in today's market. With about half of its products impacted by higher tariffs, Dollar Tree's strong value positioning puts it in a good spot as overall retail prices rise.
Citi also boosted its price target for the stock, going from $76 to $103.
Lejuez backed up his upgrade by pointing to Dollar Tree's past performance. When the company first moved away from the $1 price point, it saw solid sales growth, 9% in 2022 and 6% in 2023. The company also improved its EBIT margin to 13.7% in 2023, up from previous years. Despite a recent 10% drop in the stock, Dollar Tree remains financially stable, with strong cash flow to cover its costs.
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