Dollar Tree Can Be a ‘Dark Horse Winner’ in Tariff Era, Citi Says

Dollar Tree may be a “dark horse” beneficiary of widespread tariffs, Citi analysts said Monday while upgrading the discount retailer’s stock.

With import taxes slated to affect nearly all U.S. trade partners, Dollar Tree (DLTR) will have cover to raise prices without deterring too many customers, the bank wrote in a research note. Dollar Tree performed well during prior downturns and has cultivated a reputation for offering value, which analysts said will serve the chain well.

Citi upgraded its rating to “buy” from “neutral” and gave Dollar Tree a target price of $103. That’s more than 52% above where shares closed Friday and about 25% higher than the consensus price target among analysts who follow the company and are polled by Visible Alpha.

“We believe this higher-tariff-across-the-board environment is going to be a positive for [Dollar Tree],” the note said. “We think that [Dollar Tree] has cover to increase their base price in this environment with everyone else also increasing prices.”

Citi Analysts Think Tariffs Will Hit Rivals Harder

About half of Dollar Tree’s products will be subject to import taxes under the “reciprocal” tariffs unveiled by the White House last week, Citi estimated. But the tariffs affect so many nations that many of the discount retailer’s rivals will also be paying—and charging—more for merchandise, the analysts said.

Customers accepted Dollar Tree moving away from a “base” item price point of $1 when freight costs shot up in 2022, Citi said. Current trade policies may get the chain to a $1.50 or $1.75 price point, analysts added.

“We believe the current environment is ideal for [Dollar Tree’s] value proposition to thrive,” the note said.

Dollar Tree shares rose nearly 8% in trading Monday. Still, the shares are more than 40% below their levels seen a year ago.