Dollar Tree (NASDAQ:DLTR) shares rose around 2% intra-day today after Barclays upgraded the stock from Equalweight to Overweight, raising its price target to $150 from $115 as the retailer embarks on a streamlined growth strategy following the sale of Family Dollar.
The firm believes Dollar Tree is positioned for accelerating momentum in the back half of 2025 and into 2026. Early signs of this were seen in Q1 and are expected to strengthen further in Q2, setting the stage for sustained earnings growth.
Barclays cites both external and internal factors supporting the bullish view. Economic "trade-in" behavior—where consumers shift spending toward discount retailers—could intensify this year, especially as some competitors close stores. Internally, Dollar Tree’s multi-price point strategy is gaining traction, effectively increasing prices across its core assortment without significantly impacting volume.
Comparable store sales are expected to maintain at least mid-single-digit growth, with potential upside into the high-single-digit range. Margins were reset in Q2, setting a low bar for the second half of the year, but improvements are anticipated through the remainder of 2025 and into 2026.
Barclays also sees potential for incremental share buybacks, which could add to earnings per share this year. The firm projects adjusted EPS could exceed $6 in 2025, excluding transitory costs, compared to current guidance of $5.15–$5.65, signaling meaningful upside for 2026 and beyond.
