He cut his price target to $102 from $117.
Keith’s move is “based primarily on concerns of intensifying inflationary pressures from both freight and wages combined with core-DLTR's inability to pass through price increases, given its fixed $1-only price point,” he said.
“While management states its model has managed through inflation over time, core-DLTR’s [earnings before interest and taxes] margin has been under pressure the last two to three years.”
He sees the inflationary environment lasting through 2022.
Dollar Tree recently traded at $98.81, down 2.6%. It has slumped 8% over the past six months.
Morningstar analyst Zain Akbari puts fair value at $99.
“Management still expects Dollar Tree Plus and its combo stores to drive growth long term,” he wrote last month.
“We view the concepts favorably and think they should allow the company to leverage the strengths of each banner and its purchasing power.
“Still, we do not anticipate the benefits will include the development of an economic moat, considering the intense competitive environment.”
On Wednesday, meanwhile, Warby Parker, the online/in-store prescription eyewear company, said it confidentially filed with the Securities and Exchange Commission for a public offering of its Class A common stock.
A confidential filing is often a prelude to a direct listing, instead of a standard initial public offering.