Is it time to buy Dollar Tree shares as UBS ups price target ahead of earnings?

on Nov 22, 2021
  • Dollar Tree shares on Monday fell by 1.42% despite receiving a price boost from UBS.
  • The first raised its price target to $155 per share from $130.
  • Dollar Tree will report its fiscal Q3 results Tuesday before markets open.

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On Monday, Dollar Tree Inc. (NASDAQ:DLTR) shares edged lower by 1.42% despite receiving a price target boost from UBS. The firm raised its DLTR price target to $155 per share from $130 citing tailwinds from sustained demand for Family Dollar products. The analysts expect a core same-store growth of about 2% compared to the consensus Street estimate of 1.1%.

Dollar Tree will announce its fiscal third-quarter results on Tuesday before markets open. Analysts expect earnings per share to fall by 31.7% to about $0.95 per share, while revenue is expected to edge higher by 3.9% to about $6.42 billion. Dollar Tree has outperformed earnings expectations in each of the last seven quarters.

Is Dollar Tree a growth stock?

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From an investment perspective, Dollar Tree shares trade at reasonable trailing 12-month and forward P/E ratios of 21.26 and 21.34, respectively. Therefore, the stock could be an interesting option for value investors.

In addition, analysts expect its earnings per share to grow by nearly 63% this year before rising at an average annual rate of about 10.48% over the next five years. Therefore, the stock could also gain the attention of long-term growth investors.

Although Dollar Tree shares are up more than 57% since the 24th of September, the stock has gained just over 24% this year, thus underperforming the S&P 500 Index, which is up about 27%.

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Source – TradingView

Technically, Dollar Tree shares seem to be trading within an ascending channel formation in the intraday chart. As a result, the stock has spiked to the overbought conditions of the 14-day RSI. 

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Therefore, investors could target potential pullback profits at about $128.91, or lower at $122.95, while $138.22 and $144.09 are crucial resistance zones.

It could be time to take some profits

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In summary, although UBS just boosted its DLTR price target, the stock seems to have spiked significantly recently, thus creating an opportunity for a technical pullback. 

As a result, now could be a good time for profit-takers to swoop in.


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