UPDATE: Goldman Sachs Assumes Dollar Tree (DLTR) at Conviction Buy; Dollar General (DG) and Five Below Assumed at Neutral
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(Updated - September 6, 2016 9:11 AM EDT)
Goldman Sachs assumed coverage on Dollar Tree (NASDAQ: DLTR) with a Conviction Buy rating and a price target of $101. Dollar General (NYSE: DG) was assumed at Neutral (prior Buy) with a price target of $84, and Five Below (NASDAQ: FIVE) was assumed at Neutral (prior Sell) with a price target of $42.
Analyst Stephen Tanal said, "The dollar store business model is premised on value and convenience, each an entrenched virtue in the eye of the consumer and particularly relevant today. Outsized growth in the number of low-income households, sluggish wages lagging inflation in the cost of living, and the 'crowd-out' effect this has had on consumer budgets have raised the bar on value since the financial crisis, and hours worked has also grown over this time, driving the appeal of convenience; in all, a good cycle for the dollar stores."
Discussing Dollar Tree the analyst commented, "DLTR is benefiting from secular shifts toward value and convenience, with the added benefit of synergies that are ramping now. We expect EPS to nearly double from 2015 through 2018."
On Dollar Tree and Five Below, Tanal said, "DG is executing well against an ambitious plan and compounding value, but we expect near-term deceleration and see risks tilted to the downside ... FIVE’s growth profile is compelling, but shares look priced to perfection."
Shares of Dollar Tree closed at $83.11 yesterday.
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Related EntitiesGoldman Sachs Conviction Buy List, Goldman Sachs
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