Dollar Tree (DLTR) Q1 results reinforced confidence that improving traffic trends and margin gains could support further upside in the shares, Truist Securities said in a note on Thursday.

The brokerage said the results eased one of the market's biggest concerns around the retailer, adding that "the entire crux of the bear argument on the stock" has been centered on deteriorating customer visits.

Looking ahead, Truist said continued improvement in traffic despite higher ticket growth could help Dollar Tree shares "re-rate significantly from current levels," as investors gain confidence in merchandise improvements and store execution.

Truist maintained its buy rating and $107 price target.

Price: 111.18, Change: +15.31, Percent Change: +15.97