J.P. Morgan upgraded Dollar General (DG) stock to "overweight" from "neutral." The investment bank simultaneously raised its price target significantly, moving it to $166 from $128.
The firm cited several factors driving the decision. J.P. Morgan expects continued sales growth stemming from new stores, remodels, and merchandising initiatives. Furthermore, the bank noted a favorable macroeconomic environment supporting Dollar General's core customers.
The upgrade is based on the belief that the retailer is well-positioned to attract both its traditional low-income shoppers and middle-income consumers seeking value. Following the announcement, DG shares reacted positively in pre-market trading, rising nearly 2% to $135.9.