Wedbush Morgan Cuts Dollar Tree Outlook

Analyst Joan Storms keeps her buy rating on the discount retailer

Wedbush Morgan cut its estimates on Dollar Tree Stores (DLTR ).

Analyst Joan Storms says earnings are in line with the consensus, but a penny below her estimate. She believes management chose to be overly conservative with respect to operating margin guidance for fiscal 2005 (Jan.), even though positive comments were made on a conference call regarding benefits from systems and supply-chain investments.

Despite management's guidance, which has built in some operating margin growth, Storms cut the $1.85 fiscal 2005 earnings per share estimate to $1.82, which is more in line with consensus. To be in sync with the company's revised forecast, she trimmed the $45 target to $44. She maintains her buy rating.

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