UPDATE: Deutsche Bank Upgrades Safeway to Neutral

Deutsche Bank raises its rating on Safeway

to Hold from Buy and increases its price target from $18 to $22 on LBO take-out valuation that offsets continuing softness in fundamentals. Deutsche Bank notes, "Our concerns about SWY's fundamentals remain intact - i.e. poor EPS quality, optimistic guidance, and GPM that are structurally too high. That said, recent adjustments in the company by-laws, mgmt changes, and the widening in CDS spreads (from recent LBO speculation) will make our Sell call more difficult NT. Said differently, we've been down this road before (DG, BJ's) and sometimes the speculation alone will keep a floor on the stock. Hence, we are upgrading shares to Hold/raising our PT to $22." SWY closed at $21.92 on Wednesday.