Analyst action: Dollar General, Acadia
Denise Chai at Bank of America Merrill Lynch has upgraded shares of Dollar General to 'buy' and lifted her price target to $60, about 15 percent above where the discount retail giant (Ticker: DG) is changing hands today. A big catalyst: The company's recent refinancing will boost its bottom line right away.
Over at Avondale Partners, Kevin Campbell has updated his numbers on Acadia Healthcare after the company's beat-and-raise Q1. Campbell's EPS 2013 forecast now stands at $1.01 from 93 cents and his 2014 estimate is $1.25 versus $1.10. As a result, he also has lifted his price target for Acadia (Ticker: ACHC) to $35 from $33.
Summer concert series coming to riverfront
City officials and music industry pros this morning unveiled Nashville Dancin', a free concert series that will bring to the riverfront stage four acts for eight Thursday nights this summer. Retailer Dollar General is helping to sponsor the series by underwriting the parking at nearby LP Field.
Morales estimated that the event will draw 10,000 to 15,000 attendees to downtown Nashville each week, having a positive economic impact (approximately $5 million) on the city, particularly the businesses that will benefit from pre- and post-concert activity.
SEE ALSO: The Nashville Dancin' website
Analyst action: Dollar General, Delek
Standard & Poor's has hiked its rating of Dollar General's debt to BBB- after the discount retailer overhauled its debt profile. Analyst Ana Lai said Dollar General is poised to maintain its lead among deep discounters even though its profit growth slows as it builds out its store network. (Chairman and CEO Rick Dreiling also has said the top line and market share will trump margins for now.) Shares of Dollar General (Ticker: DG) are up 14 percent year to date.
The analysts at Cowen & Co. says Delek US Holdings remains an attractive long-term play on the rise of oil exploration in the central United States. They last week raised their price target for the Brentwood-based company to $42 from $30. Delek shares (Ticker: DK) closed Friday at $37.88 and are up almost 50 percent so far this year.
Nice prices for new Dollar General debt
Bankers have priced the $1.3 billion in new notes being issued by Dollar General. The company's new 2018 debt has been priced at 1.875 percent while the 2023 notes have an interest rate of 3.25 percent. The $1.9 billion in senior secured term loans being paid off carried an interest rate of 3 percent as of Feb. 1, the company's asset-based lending facility's rate was a little lower.
Dollar General looks to raise $1.3B in debt
KKR, Goldman selling more Dollar General shares
Moody's lifts Dollar General debt to investment grade
Analysts see stair-step 2013 for Dollar General
There was plenty of reaction from analysts Monday afternoon and this morning on the fourth-quarter results and 2013 outlook reported by Dollar General. Here’s a rundown:
• John Heinbockel at Guggenheim Securities is OK with Dollar General execs’ forecast of sales strengthening as the year goes on, helped by the rollout of tobacco across the company’s massive footprint as well as a bit of inflation. He is maintaining his "buy" rating and “potentially conservative” $57 price target.
“Bottom line, we believe DG is still a 15 percent secular grower, driven principally by significant consumables market share gains that should trade at a PEG rate in excess of 1.0x,” Heinbockel wrote.
• Deb Weinswig at Citi agreed with Heinbockel and said Dollar General is generally conservative with its outlook. She has raised her target to $67 from $65.
• Mark Montagna at Avondale Partners also sees a steady progression in sales and profit growth throughout 2013 and says there is less risk than usual of competitors hurting margins by slashing prices. He has reiterated his ‘market outperform’ rating and $55 target.
• Barclays researcher Meredith Adler has reiterated her 'overweight' rating and raised her target to $58 from $52.
• Patrick McKeever at MKM has hiked his price target to $62 from $56.
• FBR Capital Markets’ Dutch Fox also lifted his target, in his case to $60 from $55.
• And finally, a note of caution: The team at Hedgeye Risk Management say investors shouldn’t count on more margin improvements courtesy of growing consumable goods sales. The trend in their chart is clear.
Dollar General tops estimates, GC plans May exit
Dollar General shares get pre-earnings boost from Nomura
Shares of Dollar General (Ticker: DG) picked up more than 4 percent Wednesday — nearing $50 for the first time since October — after Nomura Securities analysts Aram Rubinson voiced his confidence that the discount retail giant will top consensus earnings estimates when it reports its Q4 numbers Monday. Echoing thoughts he wrote about five weeks ago, Rubinson said Dollar General should have little problem maintaining — or even lifting — its sales growth in consumable goods.
"Considering Dollar General is pushing harder into beer, wine and now tobacco, we wouldn't be surprised to see the channel improve from its 12 percent to 14 percent pattern over time," Rubinson wrote in a note to investors. "Either way, we think our estimates are not overly demanding."
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