On Thursday, BMO Capital Markets maintained its Outperform rating on shares of Dollarama Inc. (DOL:CN) (OTC: DLMAF) and increased the price target to C$147.00 from the previous C$138.00. This adjustment comes after the company's recent quarterly financial report, which surpassed the cautious market expectations.
The company's second-quarter performance for fiscal year 2025 was notably better than anticipated, calming investor concerns that same-store sales (SSS) might underperform. Moreover, Dollarama's outlook for the second half of the year aligns with predictions, providing a stable view for the near-term.
Investors have previously expressed reservations about Dollarama's valuation, which at 19.5 times the firm's fiscal year 2026 estimated EBITDA, exceeds the historical average of 15 to 18 times. Despite this, the analyst suggests that the stock price might stay within a certain range until comparable year-over-year financial results can be evaluated.
The report further elaborates on Dollarama's long-term prospects, indicating that the company's consistent performance could set the stage for its evolution into a global dollar store conglomerate. The updated price target reflects a valuation at 21 times the projected fiscal year 2026 EBITDA, a slight increase from the previous 20 times estimate.
This new stock price target of C$147.00 underscores BMO Capital Markets' confidence in Dollarama's continued growth and its potential for international expansion.
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