Deutsche Bank Downgrades Dollar General (DG) to Hold
Deutsche Bank analyst Krisztine Katai downgraded Dollar General (NYSE: DG) from Buy to Hold with a price target of $110.00 (from $170.00).
The analyst comments "DG (Downgrading to Hold; PT $110; Reporting on 6/2): We see DG’s customer base increasingly challenged, and the K-shaped economy continuing to widen the gap between the low vs. the high end, likely limiting SSS upside. This is underscored by our proprietary dbDIG Consumer Concerns survey (see Figures 1-3), which highlights the disparity between lower- and higher-income cohorts. In addition, as conventional grocers increasingly focus on sharpening their pricing position, DG could see gross margin pressure to maintain price gaps. To this end, we point to our latest field work that showcases DG continuing to narrow the gap vs. WMT, with April ~400 bps above WMT’s basket compared to approx. 700 bps in February. Part of this appears to be CPG-funded, but we believe DG has also layered on additional price investments to enhance its competitive position."
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Shares of Dollar General closed at $103.61 yesterday.