Dollar Tree (DLTR) Plunges 4.11% to Two-Year Low Amid Tariff Fears, Earnings Concerns

Dollar Tree (DLTR) shares plunged to a two-year low, with a 4.11% intraday drop, signaling growing investor unease as the stock fell 1.70% on September 9, 2025. The decline marked its weakest level since June 2025, reflecting mounting concerns over trade policy risks and operational challenges.

Analyst sentiment has shifted sharply, with multiple firms revising down price targets amid worries about tariffs eroding profit margins. Guggenheim Securities cut its target to $125 from $130, while Piper Sandler reduced its estimate to $108. BNP Paribas downgraded from “Strong-Buy” to “Hold,” citing soft consumer demand and macroeconomic headwinds. These adjustments underscored uncertainty over Dollar Tree’s ability to offset rising costs linked to trade tensions.

The stock’s underperformance against the S&P 500—down 13% in recent months—was fueled by mixed earnings signals. While Q2 revenue rose 12.3% year-over-year, the Dollar Tree segment saw a 38.1% revenue decline, highlighting weaker foot traffic and reduced spending. Negative free cash flow of $88.8 million further dented confidence, as investors questioned the sustainability of the company’s $1.25 pricing model amid inflationary pressures.

Tariff-related cost pressures remain a critical drag, with analysts noting their impact on gross margins. Dollar Tree’s reliance on imported goods has amplified vulnerability to trade policy shifts, forcing difficult choices between absorbing costs or passing them to price-sensitive customers. Telsey Advisory Group revised its Q3 2026 EPS forecast downward to $1.10 from $1.36, reflecting skepticism about near-term recovery.

Investor sentiment remains divided, with 8 “Buy” ratings, 12 “Hold” ratings, and 3 “Sell” ratings currently in play. This divergence has contributed to heightened volatility, with the stock experiencing 16 moves exceeding 5% in the past year. Despite some firms expressing cautious optimism, such as Evercore ISI raising its target to $110, broader market skepticism persists, particularly as earnings estimates are downgraded and cash flow challenges linger.