JP Morgan Downgrades Family Dollar; “Neutral” Rating (FDO)

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JP Morgan reported on Wednesday that they have downgraded discount retail chain, Family Dollar Stores, Inc.( FDO ) to "Neutral."

Analysts from the firm have downgraded FDO from an "Overweight" to "Neutral," and have reduced its price target from $75 to $70. This price target suggests a 7% increase from the stock's current price of $64.68.

The firm noted, "taking a step back FDO is up 30% over the past year (significantly outpacing DG/DLTR +12%/-11% and S&P +4.8%) given new mgmt at the helm (M. Bloom) and operational levers put in place (re-worked marketing approach, private label, and direct sourcing penetration). Net/net - we believe in Bloom and FDO's array of top-line (national brand additions, tobacco) and bottom-line drivers but believe improvement is largely priced into the stock at this level (particularly trading at 109 bps premium to DG/DLTR) with competitive pressures heating up."

Family Dollar shares were mostly flat during premarket trading Wednesday. The stock is up 12% YTD.

The Bottom Line
Shares of Family Dollar Stores ( FDO ) have a 1.30% dividend yield, based on last night's closing stock price of $61-$62 a share. If the shares can firm up, we see overhead resistance around the $70 price level.

Family Dollar Stores, Inc.( FDO ) is not recommended at this time, holding a DARS™ Rating of 3.3 out of 5 stars.

Be sure to visit our complete recommended list of the Best Dividend Stocks , as well as a detailed explanation of our ratings system here .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

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This article appears in: Investing , Stocks

Referenced Stocks: FDO

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