Dollar General (DG) is navigating mounting competitive and pricing pressures, with limited opportunity for top-line improvement, Deutsche Bank said in a note emailed Monday.

The brokerage downgraded the stock to hold from buy, citing "still challenging fundamentals and intensifying competition," Deutsche Bank analyst Krisztina Katai said.

"Top-line performance remains soft with limited opportunity for improvement, and we think the company's lagging e-commerce presence is a growing concern," Katai wrote.

Dollar General is scheduled to report fiscal fourth-quarter results on March 13. Analysts polled by FactSet are modeling for revenue of $10.26 billion and earnings per share of $1.51 through the three-month period that included the critical holiday season. Last year, the company reported fourth-quarter revenue of $9.86 billion and EPS of $1.83, both down year to year.

The company faces margin headwinds through at least 2025, according to the Deutsche Bank report. However, it sees a favorable risk-reward balance at Dollar Tree (DLTR).

The brokerage prefers retailers such as Walmart (WMT) and Costco (COST) that offer both value and convenience.

"Consumer retail entered 2025 navigating a complex landscape and retail earnings season has been a volatile one," according to Deutsche Bank. Within the retailers reporting over the next two weeks, Costco is the brokerage's top pick. The warehouse chain last month said that US comparable sales climbed 9.2% in January year over year.

The brokerage sees "limited upside" for Target (TGT) with muted top-line performance and margin pressures that are expected to build amid competition from companies like Walmart, Costco and Amazon (AMZN), Katai said.