Dollar Tree (DLTR) is grappling with volatile trends as the retailer works to retain its appeal to budget-strained shoppers amid rising costs and mounting affordability pressures, UBS Securities said Thursday in a report.
UBS said the market widely expects fiscal Q1 comparable sales at or below the bottom end of the company's 3% to 4% full-year comp outlook, making the current 3.6% consensus appear too optimistic.
Dollar Tree will likely move its comparable-sales outlook to 1% to 3% for the year, which in turn would probably mean lowering its EPS forecast to $6.10 to $6.50 from the current $6.50 to $6.90 range, the report said.
The company will also need to account for higher fuel and transportation costs alongside a softer sales outlook, UBS said. Q1 results are due Thursday.
UBS lowered its price target on Dollar Tree stock to $132 from $138 and maintained its buy rating.
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