What Happened?
Shares of discount treasure-hunt retailer Dollar Tree (NASDAQ:DLTR) fell 3.8% in the morning session after Guggenheim lowered its price target on the stock, citing concerns over tariffs. The investment firm reduced its target to $125 from $130 but maintained its Buy rating on the discount retailer. Guggenheim noted that volatility in the company's performance is "largely tariff-related," impacting costs and expenses. This follows a period where the stock has underperformed the S&P 500 by about 13%, which the firm attributed to softer comparable sales and weaker-than-expected third-quarter earnings guidance. Adding to the cautious sentiment, Piper Sandler also lowered its price target for Dollar Tree to $108, while maintaining a Neutral rating on the shares.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Dollar Tree? Access our full analysis report here, it’s free.
What Is The Market Telling Us
Dollar Tree’s shares are quite volatile and have had 16 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 previous big move we wrote about was 5 days ago when the stock dropped 7% as investors appeared to look past the company's second-quarter earnings beat and raised full-year guidance, focusing instead on concerning underlying trends. The discount retailer reported second-quarter revenue and adjusted earnings that topped Wall Street's expectations and lifted its full-year outlook for both metrics. However, the positive headline numbers were overshadowed by a steep 38.1% year-on-year decline in revenue for the quarter.
Furthermore, the company reported negative free cash flow of $88.8 million, and the report highlighted that analysts expect revenue to decline by another 9.6% over the next 12 months. These underlying weaknesses likely spooked investors, leading to the sell-off despite the beat-and-raise quarter.
Dollar Tree is up 27% since the beginning of the year, but at $97.16 per share, it is still trading 17.1% below its 52-week high of $117.16 from August 2025. Investors who bought $1,000 worth of Dollar Tree’s shares 5 years ago would now be looking at an investment worth $1,082.
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