It’s a dark day when economic conditions are actually too bad for the dollar stores to keep up. And Dollar Tree (DLTR) lost fractionally in Tuesday afternoon’s trading after Piper Sandler cut its rating. Five-star analyst Peter Keith didn’t have much good to say about Dollar Tree, noting that, should Donald Trump come back in as president—an increasingly likely phenomenon based on current polling—Dollar Tree would find itself “uniquely disadvantaged” as one of Trump’s key policies would likely feature tariffs on Chinese imported goods.
That would indeed be a blow, which explains why Keith lowered his rating from Overweight to Neutral and his price target from $143 to $112 per share. It doesn’t help matters that the economy is already troubled in several sectors, to the point where many shoppers are turning to buy-now-pay-later (BNPL) platforms to buy groceries on the installment plan.
A One-Two Punch
This by itself would be a blow for Dollar Tree, but it gets worse. The news comes just weeks after reports that Dollar Tree was selling applesauce tainted with lead and that sales of the affected products continued for several months after the recall efforts went through.
After the initial announcement, the Food and Drug Administration (FDA) launched a Recall Audit Check at Dollar Tree stores, attempting to figure out if the chain had received the notices and was carrying out the terms of said notice accordingly. The FDA declared that “…the recall was ineffective at the retail level due to Dollar Tree’s failure to adequately remove recalled product…”
Is Dollar Tree a Good Stock to Buy?
Overall, analysts have a Moderate Buy consensus rating on DLTR stock based on 11 Buys, eight Holds, and one Sell assigned in the past three months, as indicated by the graphic below. After a 30.49% loss in its share price over the past year, the average DLTR price target of $137.89 per share implies 33.03% upside potential.
