11:38 AM EST, 12/13/2024 (MT Newswires) -- Dollarama's ( DLMAF ) value proposition, flexible pricing strategy and appeal to a wide income spectrum have allowed consistent revenue growth in the mid-to-high single digits but there is limited upside potential at current levels, UBS Securities said in a note emailed Friday.

The firm said that Dollarama ( DLMAF ) has significantly expanded operating margins through private label penetration, competitive vendor pricing, and flexible strategies that adapt to inflation.

UBS expects margin expansion to 27.1% by fiscal year 2026, driven in part by its Dollarcity business. However, there are limits to further margin levers.

"Dollarcity provides an attractive growth opportunity for DOL, with solid EBITDA contribution and potential upside from expansion," the firm added.

UBS initiated coverage of Dollarama ( DLMAF ) with a neutral rating and a price target of 147 Canadian dollars ($103.25).

Price: 50.75, Change: -0.11, Percent Change: -0.22