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Investing.com - UBS maintained its buy rating and $128.00 price target on Dollar General (NYSE:DG) stock Wednesday, citing the retailer’s improving trajectory after a period of inconsistent performance. The stock has shown remarkable momentum, with InvestingPro data showing a 50.5% surge over the past six months, though it remains 11.3% lower than a year ago.
The investment firm described recent discussions with Dollar General as having "the most positive tenor" the company has provided in several years, highlighting a potential path to significant margin improvement. InvestingPro analysis indicates the company maintains a "GOOD" overall financial health score, with particularly strong marks in profitability metrics.
UBS noted that Dollar General’s operating margin could reach the 6-7% range outlined by the company, up from approximately 4.5% expected this year, which would represent substantial progress in its recovery efforts.
The firm projected that achieving this margin potential could enable Dollar General to more than double its earnings per share over the next few years compared to the midpoint of its current year guidance of $5.50.
UBS addressed investor concerns about the sustainability of Dollar General’s recent stock momentum, stating that there is "more room to run" as the company addresses its margin challenges and returns to a more consistent performance pattern.
In other recent news, Dollar General has seen multiple analysts raise their price targets following strong fiscal first-quarter 2025 results. UBS increased its target to $128, citing signs of accelerating growth and robust earnings per share (EPS) performance. BMO Capital raised its target to $115, noting the company’s first EPS growth in two years and improvements in execution. Loop Capital set a new target of $110, highlighting better-than-expected revenue and improved margins. Bernstein SocGen adjusted its target to $126, acknowledging progress in gross margin recovery and increased comparable sales. Raymond (NSE:RYMD) James also raised its target to $125, commending Dollar General’s operational improvements and strategic initiatives. Analysts across these firms maintain a positive outlook, with some noting potential for further growth and margin expansion. While some firms maintain a Hold or Market Perform rating due to potential risks, the overall sentiment reflects confidence in Dollar General’s recent performance and future prospects.
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