Dollar General (DG) PT Raised to $275 at Guggenheim, New Best Idea

Guggenheim analyst John Heinbockel raised the price target on Dollar General (NYSE: DG) to $275.00 (from $270.00) while maintaining a Buy rating.

The analyst comments "We are designating DG as our new Best Idea, replacing PFGC, on the belief that a leading value-oriented and exceptionally well-run consumables retailer will outperform in the initial stages of an economic downturn. In short, ~80% of sales are in the defensive food and beverage, paper and cleaning, and health and wellness categories, within which a superior value proposition is driving solid share gains. The consumables comp contribution is the strongest among peers. In addition, the NCI initiative makes DG more relevant to more households, supporting modest discretionary comps via increased trade-down activity. We believe that above-average operating momentum and potential upside versus conservative 2023 Street expectations should drive relative share price performance in 1H 2023. Our upwardly revised PT—$275 from $270, Exhibit 1—implies a reasonable ~13x 2023 EBITDA and ~19x 2023E EPS, resulting in an ~13% one-year TSR."

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