Piper Jaffray Maintains "Neutral" Rating and Price Target for Dollar Tree Stores

According to Piper Jaffray, Dollar Tree Stores DLTR reported Q4 comparable stores sales growth of just 3.9%, below Piper Jaffray's and consensus estimates of above 5%. In the report, Piper Jaffray notes that slowing income growth for DLTR customers in 2011 should contribute to slowing comps growth. Despite the below-estimate comps, DLTR reported better gross margins at 37.6% versus Piper Jaffray's 37.3% estimate. Nevertheless, some factors that contribute to slowing income growth are the lack of a government stimulus and higher food and gas prices, all of which would apply pressure on the comps growth. Piper Jaffray currently has a “Neutral” rating and a price target of $51 for DLTR. Some risks that may prevent DLTR from realizing its price target include: “macroeconomic variables affecting consumer spending, weather, competition, and rollout of the cooler program”. DLTR is currently trading at $48.58 ($52.17 when report was published).