Dollar General (DG) Estimates, PT Raised to $260 at Telsey

Telsey analyst Joseph Feldman raised the price target on Dollar General (NYSE: DG) to $260.00 (from $235.00) while maintaining an Outperform rating after raising Q2 estimates.

The analyst commented, "We are raising our 2Q21 earnings forecast to less of a decrease, reflecting a healthy consumer spending environment, supported by governmental aid, as well as ongoing gains from strategic initiatives. Broadly, we believe Dollar General remains well positioned to gain market share, driven by its convenient locations (~75% of stores in rural markets), strong customer relationships, and value-focused, defensive product mix. In the medium term, we expect continued solid performance, helped by new store openings (including Popshelf and DGX), remodels, and a number of initiatives, including the expansion of cooler doors, DG Fresh supply chain upgrades, Fast Track inventory/labor management, the rollout of self-checkout, and expansion of non-consumables initiatives, partly offset by elevated costs, including freight. We maintain our Outperform rating and are raising our 12-month price target by $25 to $260, based on applying a P/E multiple of 23x, up from 21x to reflect the solid operation, to our raised 2022 EPS estimate of $11.33."

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