JP Morgan updated Dollar General (NYSE:DG) from Underweight to Neutral and raised its price target on Dollar Tree (NASDAQ:DLTR) by 5% to $165 ahead of this week’s fourth-quarter results from both discounters.
JP Morgan analyst Matthew Boss cites expectations for revenue improvement in 2024 due to upgrade in Dollar General (DG) as the company focuses on improving store standards, customer service and citing a sequential delivery timeline rather than a late-night “snapping your fingers” inflection.
However, Boss’s 30.3% gross margin for full-year 2024 (versus 30.6% forecast) versus 2019 assumes headwinds related to shrink, consumable mix, markdowns and transportation .
Boss raised his price target for Dollar General to $158 from $120.
The Street’s consensus estimates for Dollar General (DG) are calling for non-GAAP EPS of $1.73 on $9.78 billion in revenue. Last quarter, the company beat both EPS and revenue expectations by 8 cents and $18.6 million, respectively.
Analysts are mostly neutral on Dollar General (DG)
On Dollar Tree (DLTR), which reports the fourth quarter ahead of Wednesday’s open, the bank raised its fourth-quarter banner comps to 6.5% versus the Street’s consensus estimate of 5.4% and their latest industry study suggesting incremental market share gains for Dollar Tree (DLTR) particularly in suburban and rural locations, resulting in homes with income above $125,000. JP Morgan also raised its Q4 EPS estimate to $2.73 and FY24 EPS estimate to $7.04.
Dollar Tree (DLTR) is expected to report non-GAAP EPS of $2.65 on $8.65 billion in sales. Last quarter, the company missed both EPS and revenue expectations by 4 cents and $107.4 million, respectively.
Analysts are bullish on Dollar Tree (DLTR) with Seeking Alpha writers and Wall Street analysts rating the stock a Buy and Seeking Alpha’s Quant rating also a Buy.
Shares of Dollar Tree (DLTR) and Dollar General (DG) are both higher at Tuesday’s open.