Family Dollar (FDO) Has Limited Upside, Thinks Goldman

Family Dollar Stores Inc. (NYSE: FDO) recently reported Q3 results that topped estimates. The beat is tied to better than expected gross margin and SG&A. In response, Goldman Sachs raised estimates, but maintained a Neutral rating with a modified price target of $69 (from $65). Analyst Stephen Grambling the rally leaves limited upside.

"We expect less gross margin contraction as mix shift pressure wanes, sourcing and private label initiatives mature, and markdowns are offset by cutting receipts and better inventory management. Given softer SSS, we expect less SG&A leverage, but are encouraged by FDO's expense control over the past two quarters even as SSS fell below the typical leverage point of 3%- 4%," said Grambling.

For an analyst ratings summary and ratings history on Family Dollar Stores Inc. click here. For more ratings news on Family Dollar Stores Inc. click here.

Shares of Family Dollar Stores Inc. closed at $68.50 yesterday.

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