Dollar Tree (DLTR) shares were downgraded to Neutral by Citi on Friday, reflecting a shift from previous Buy rating. The firm now views the stock’s rebound as having “limited upside” despite strong operational momentum. Shares have surged 100% since April 2025, following the U.S. administration’s tariff announcement, with $132 cited as the target price.

Citi analyst Paul Lejuez acknowledged the retailer’s “multi-price strategy” successes but noted foot-traffic growth slowed to 1.1% in Q4, down from 2.2% in Q3. However, credit-card data showed dollar-store spending rose 9.1% quarterly. Citi raised its Q4 earnings forecast to $2.63 per share (vs. consensus $2.53), driven by 6% same-store sales growth and 150 basis points of margin expansion. Fiscal 2026 guidance is expected to range $6.50–$7.00 per share, below the market’s $6.70 consensus.

While Citi’s model projects $7.45 EPS for 2026, Lejuez emphasized investor expectations of “$7+” create near-term valuation challenges. The firm described the setup as “slightly favorable” ahead of its March 16 earnings report but maintained a balanced 12-month outlook. ProPicks AI, which evaluates 100+ metrics, currently ranks DLTR among small-cap sprinters but highlights better opportunities in its AI-driven strategies.

The downgrade underscores Wall Street’s cautious optimism: Dollar Tree’s recovery aligns with broader discount-retail trends, yet near-term expectations outpace management’s near-term guidance. Investors should monitor the Q4 report’s impact on growth trajectories and whether pricing power sustains amid macroeconomic pressures.