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Pro Analysis

Dollar Tree to rally 14%, according to Deutsche Bank

A Dollar Tree store in Miami
Getty Images
A Dollar Tree store in Miami

Deutsche Bank raised its rating for Dollar Tree to buy from hold, citing the improving low-end consumer market and better prospects for profitability in the coming years.

"Macro backdrop supporting sustained momentum in these 'defensive names' as spending prospects of the 'low-end' customer base improves ... supported by higher spending power (i.e. lower gas prices, strong employment gains, etc.) and margin initiatives that outweigh labor costs," Deutsche Bank's Paul Trussell wrote in a note to clients Sunday.

"We see material margin upside to Street consensus and re-rate the company to reflect long-term earnings power."