Boston, MA 05/30/2014 (wallstreetpr) – Chain of discount retail store operator Dollar General Corp. (NYSE:DG) shares are not in the favorite list of Deutsche Bank as far as the investment is concerned. The bank has downgraded the stock, since it is more concerned with the headwinds that have the potential to impact its results.
Downgrade Rating
The brokerage has downgraded the shares of the discount retail store operator to hold from Buy rating with a price tag of $60.00 compared to its earlier price target of $65.00. Though the investment advisor believes that Dollar General continues to be one of the well managed companies in a retail sector, especially with a testimony of a long track record of success, it does not think that the stock will outperform in the current year due to the number of headwinds likely to impact its results.
Deutsche Bank analyst sees the biggest challenge for the company to see an uptick of 3-4% in same store sales and at the same time maintain flat or up gross profit margin because of a challenging pricing environment thrown up by rivals.
The brokerage sees that Dollar General Corp. (NYSE:DG) will be able to witness EBIT growth of just 2-4% in the current year, and that makes it less attractive for them. Instead, the brokerage is moving away and reducing the exposure in the company.
Other Brokerage Views
There are also other analysts from different brokerages viewing the stock as Hold. For instance, Jefferies Group initiated its coverage on Dollar General Corp. (NYSE:DG). shares with a Hold rating in April. Similar is the case with regard to Zacks analyst, who reiterated Hold rating.
Currently, at least eight analysts have kept the rating of Hold on Dollar General Corp. shares while 13 analysts rate the stock as a Buy. The consensus price target is around $62.58 for the stock with a Buy rating.
During the fourth quarter, the company’s earnings and revenue fell shy of the Street analysts’ expectations triggering price cut and rating changes.
