Desjardins has increased the price target for Dollarama Inc. (DOL:CN) (OTC: DLMAF) shares to Cdn$140.00, up from the previous Cdn$133.00, while reiterating a Buy rating on the stock. The adjustment comes as the analyst anticipates the company to continue showing solid demand for consumables, contributing to steady same-store sales growth (SSSG) normalization.
The analyst noted that while a "beat and raise" scenario for the second quarter is not expected, the results should indicate a consistent performance. This is particularly relevant given the current uncertainty surrounding consumer spending, which may affect discretionary spending categories.
As a result, the forecast for fiscal year 2025 same-store sales growth has been moderated to 4.0%, down from 4.4%. This remains within the company's guidance range of 3.5% to 4.5% and is slightly below the consensus of 4.3%.
Despite the slight moderation in growth expectations, the analyst's positive outlook for Dollarama is based on the company's ability to outperform in the near term.
The revised price target suggests a modest return but reflects confidence in Dollarama's relative performance in the market. The analyst's comments highlight the company's resilience and the expectation that it will maintain its momentum in sales of essential goods, which have been a key driver for the retailer during uncertain economic times.
Investors and market watchers will be paying close attention to Dollarama's upcoming financial reports to see if the company can meet these moderated growth expectations and continue to thrive amidst consumer uncertainty.
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