Jefferies upgraded the stock to a buy with a $79 price target Monday. The former target was $55. Morgan Stanley released a note with the same price target Monday.
Jefferies analyst Daniel Binder also upgraded Dollar General to a buy on the premise that it could purchase Family Dollar and improve its competitive position. Binder said a merger between Family Dollar and Dollar General would create between $950 million and $1.2 billion in synergies. In his note, Binder said the upgrade is based on "a potential combination of Dollar General and Family Dollar and the enormous synergies we see as a result."
Family Dollar is far less interesting, he said, as a standalone company and is fairly valued at around $60 per share.
At the time of publication, the author held no positions in any of the stocks mentioned.
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