10:46 AM EDT, 09/04/2025 (MT Newswires) -- Dollar Tree's ( DLTR ) Q2 print could signal a more volatile business model, but the challenges are not structural and mainly caused by transitory factors, UBS said in a Thursday research report.

The brokerage said these factors in Q2 were incremental tariff pressures, as well as the company's expectation of lower transition services agreement income related to its Family Dollar divestment. Analysts think these factors were largely out of the company's control.

The company likely pointed to the Q3-to-date comps running toward the low-end of its annual guidance range, which implies it is "comping" in the 4%+ region. UBS said the company will have scope to reaccelerate its comp growth, citing seasonal events in the remainder of the year.

Dollar Tree ( DLTR ) is facing one-time headwinds, which should abate in 2026 and thus support its margins. The company's additional labor costs should become a tailwind next year, while the company benefits further from price actions to mitigate tariff expenses. Its capex investments could also moderate starting next year, according to the note.

Dollar Tree's ( DLTR ) Q2 print revealed a 6.5% comp growth and witnessed a solid inflow of new customers. For 2026, tailwinds should include lapping re-stickering costs, the "wrap-around" impact of freight benefits, and multi-price rollout benefits. In base case, UBS expects the company to post 2026 adjusted EPS of $6.27.

The brokerage said it maintained its buy rating on the stock and price target of $135 per share.

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