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Investing.com -- Dollar Tree (NASDAQ:DLTR) faced a wave of downgrades from analysts this week as concerns mount over its financial performance and future prospects.

BMO (TSX:BMO) Capital, Loop Capital, and JPMorgan (NYSE:JPM) all cut the stock's rating, citing underwhelming results and a lack of confidence in the company's outlook.

BMO Capital downgraded Dollar Tree to Market Perform, cutting its price target to $68. "We no longer have conviction in the company's outlook," BMO declared, pointing to potential risks such as flat or negative comparable sales in the Dollar Tree banner, increased competition, and regulatory headwinds.

These factors, BMO suggested, could push Dollar Tree's valuation closer to that of drug and grocery retailers. They also noted that there is a risk competitive dynamics could still get worse, and potential regulatory headwinds could further weigh on 2025.

Loop Capital also downgraded the stock to Hold from Buy, lowering its price target from $170 to $65.

The firm criticized Dollar Tree for its ongoing string of earnings disappointments, particularly in the second quarter, where weak Easter results were blamed for the miss.

Loop Capital expressed skepticism over any near-term improvement, stating, "We see no reason to believe Dollar Tree's performance will improve markedly anytime soon."

They added that to make matters even worse, they "have no visibility on the likelihood of the company being able to successfully dispose of Family Dollar."

Finally, JPMorgan downgraded Dollar Tree to Neutral following a significant second-quarter earnings miss, where the company posted adjusted EPS of $0.67, well below consensus.

The investment bank also noted concerns about Dollar Tree's reduced full-year guidance and declining same-store sales growth.

JPMorgan warned of "core erosion" in profitability and adjusted its FY24 EPS outlook to reflect a more conservative view on discretionary sales.

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