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Dollar Tree (DLTR) shares surged 8.72% to $96.35 on June 5, 2025, following strong Q1 earnings and multiple analyst upgrades. The discount retailer gained 2.6 million new customers, with high-income households driving much of the growth as economic pressures push wealthier consumers toward value retailers.

Strong Q1 Performance Drives Momentum for Dollar Tree
 

Dollar Tree delivered impressive Q1 2025 results, beating earnings expectations with adjusted EPS of $1.26 versus the forecasted $1.21.

The company added 2.6 million new customers during the quarter, with CEO Michael Creedon crediting expanded merchandise assortment that now includes items costing up to $7, though 85% of products still cost $2 or less.

The retailer posted a 9% increase in customers visiting stores at least three times per month, driven by purchases of consumables like candy, snacks, and drinks that encourage repeat visits.

Morgan Stanley Ups Price Target for Dollar Tree
 

Multiple investment firms raised their price targets following the earnings beat. Morgan Stanley increased its target to $96 from $80 while maintaining an Equalweight rating, projecting 2026 EPS of $6.39 and valuing the stock at approximately 15 times earnings. Truist raised its target to $109 from $100 with a Buy rating, while Goldman Sachs lifted theirs to $94 from $86. The analysts noted comparable sales growth expectations of 4.6% for 2025 and 4.0% for 2026, with projected EBIT growth of 5% in 2025 and 13% in 2026.

High-Income Shoppers Drive Growth
 

The most significant trend emerging from Dollar Tree’s results is the influx of high-income customers earning at least six figures annually. This demographic shift represents a broader economic warning sign, as affluent households increasingly seek value amid economic uncertainty.

Dollar Tree’s strategy of diversifying merchandise and introducing multi-price points has successfully attracted these higher-income consumers, who are drawn to smaller pack sizes and competitive pricing during tight budget management.

With current metrics showing a PE ratio of 19.01, market cap of $20.114 billion, and YTD returns of +28.61% (versus S&P 500’s +1.94%), Dollar Tree is capitalizing on economic trends that favor discount retailers across income levels.

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