Morgan Stanley analyst Simeon Gutman has maintained their neutral stance on DG stock, giving a Hold rating on September 23.
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Simeon Gutman has given his Hold rating due to a combination of factors influencing Dollar General’s current and future performance. The company’s execution is showing signs of improvement, with EBIT margins expected to rise as comparable sales return to positive territory. Under the leadership of CEO Todd Vasos, Dollar General’s strategy focusing on supply chain, inventory management, and merchandising is aligning with historical standards, and growth initiatives are being implemented to enhance comparable sales.
However, the rating is tempered by competitive pressures and the company’s ability to consistently achieve comparable sales growth in the 2%-3% range. While there is potential for significant upside if EBIT margins reach 6%-7%, the market remains cautious, reflected in the consensus EPS estimates. The success of Dollar General’s digital strategies and retail media contributions are critical to achieving these targets. Without stronger comparable sales growth exceeding 3%, there is skepticism about reaching higher EBIT margins, leading to the Hold rating despite a potential 22% upside to the price target of $125.
In another report released on September 23, Evercore ISI also maintained a Hold rating on the stock with a $114.00 price target.