Deutsche Bank Is Boosting Targets At Dollar General

Shares of Dollar General Corp.

rose more than 3 percent on Wednesday morning, after Deutsche Bank analyst Paul Trussell and Research Associate Tiffany Kanaga raised their price target on the stock from $80 to $85. The increase followed their Tuesday meeting with the company's management, which left them feeling bullish about the opportunity to drive the top line, even in spite of higher oil prices and weak labor data. The firm also boosted its fiscal 2015 EPS and revenue estimates, from $3.93 to $3.95, and from $20.451 billion to $20.477 billion. They maintain a Buy rating on the stock. Below, the main takeaways from the meetings with management. 1) Dollar General is "stepping on the gas during FDO's transition through accelerated store growth & labor investment (to improve in-stocks and checkout efficiency);" 2) "Share gains (+overall strong top-line trends) are to come through affordability initiatives, SKU productivity focus, & discretionary category improvements;" 3) "Margin opportunity is ahead with GPM turning the corner (improved shrink & mix) and steady SG&A leverage thresholds. With limited threats competitively (i.e. no major WMT Express rollout & FDO likely slowing growth) and a deep bench ready to fill upcoming departures, we believe DG is well positioned to drive mid-to high-teens EPS growth while also raising its dividend payout ratio."