Dollar General initiated with an Outperform at Bernstein

Bernstein analyst Zhihan Ma initiated coverage of Dollar General with an Outperform rating and $98 price target The firm started seven companies in the U.S. broadlines and hardlines retail industry with Walmart (WMT) its top pick. The analyst expects Walmart to leverage its scale advantage to offer “great value to consumers in times of uncertainty and to gain share in an omni-channel market.” Walmart will be one of the few retailers that can grow e-commerce profitably, the analyst tells investors in a research note. Bernstein is also positive on Costco (COST), saying the company’s international growth potential is underappreciated. The firm also put an Outperform rating on Dollar General (DG), its “most controversial call,” as it sees significant store growth and gross margin expansion potential over the longer term. Bernstein prefers Lowe’s (LOW) over Home Depot (HD), seeing growth opportunities in the former’s Pro segment. Target (TGT) and Dollar Tree (DLTR) were given Market Perform ratings.