Key Takeaways

Dollar Tree ( DLTR ) shares extended their Wednesday gains into Thursday, leading the S&P 500 's risers as analysts issued bullish comments on the retailer's deal to sell the Family Dollar brand .

UBS Securities analysts on Thursday maintained their "buy" rating with a $95 price target , and said the Family Dollar sale "will make the investment case on the stock compelling, despite various uncertainties like the impact of tariffs ."

Dollar Tree 'Removed Its Biggest Hurdle' to Shareholder Value

With the $1 billion Family Dollar brand sale to a pair of private equity firms, the analysts said they believe Dollar Tree has "finally removed its biggest hurdle to create shareholder value ." The analysts said they believe investor sentiment should improve as Dollar Tree's earnings get a boost without Family Dollar.

The analysts cited management's comments that customers from across a range of income levels are turning to Dollar Tree as a sign that the company is "well positioned to benefit" from consumers trading down and looking for value.

In another research note Thursday, JPMorgan analysts kept their "neutral" rating while trimming their price target to $78 from $88 to reflect the value of Dollar Tree operating as a standalone business rather than with Family Dollar.

UBS's $95 price target is higher than the $78.29 consensus compiled by Visible Alpha, while JPM's new price target is in line with the average. Thursday afternoon, Dollar Tree shares had gained 10% to $76.31.

Analysts from both brokerage firms also noted the potential headwinds of the Trump administration's tariffs. Dollar Tree executives have said they have not factored all of the announced tariffs into their full-year outlook numbers. However, the UBS analysts said benefits like the Family Dollar sale and improving comparable-store sales trends "outweigh" the risk of tariffs.

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