HSBC upgraded Dollar General to Buy from Hold on Sept. 24 and lifted its price target to $160 from $125. The call cited latest-quarter revenue growth of 5.2% and comparable-sales growth of 3.5%, with gains from more traffic and larger baskets rather than price increases.
Analyst Daniela Bretthauer made the call. Dollar General shares rose 1.6% to close at $122.53, while the article put the average Wall Street price target near $137.
The article flags risks to the recovery: Dollar General's lower-income customers face pressure from borrowing costs, Walmart has been taking share among those shoppers, and earlier turnaround efforts encountered similar customer strain. It says continued traffic growth in the next quarter is a key test of HSBC's case.
