The Fresh Market Sells Off After Pricing Public Offering
The Fresh Market (NASDAQ: TFM) today announced the pricing of its previously-announced public offering, with 10,033,141 shares of company common stock priced at $50.50. Morgan Stanley (NYSE: MS) is acting as the sole underwriter.
As the transaction underwriter, Morgan Stanley is granted the opportunity, by certain selling stockholders, to purchase an additional 1,504,971 shares of common stock.
The Fresh Market traded down about 2% early Wednesday, but has been enjoying a nice run-up. The specialty retailer and grocer released Q1 2012 earnings on May 30, reporting a 43% rise in Q1 fiscal year profit and raising company full-year earnings guidance from $1.26-1.31 to $1.28-1.34 per share.
On May 31, both Goldman Sachs (NYSE: GS) and JP Morgan (NYSE: JPM) increased price targets on the company - Goldman Sachs raised its target from $47 to $53 while JP Morgan boosted its target from $55 to $61.
In JP Morgan's report, the research firm also reiterated its Overweight rating, stating:
"TFM's top line and gross margin seem to be gaining momentum, and we have no reason to believe the drivers behind 1Q12's results will not continue in the future. Additionally, since it is still early in the fiscal year, we think management's slightly raised guidance could be conservative, which would make the case for further earnings beats more likely. Though TFM is expensive on nearly every valuation metric, we believe the company's growth potential and recent high-single-digit comps justify the stock's current premium."
The Fresh Market operates 115 stores across 21 states nationwide, with a focus on specialty and healthy food items - similar to competitors Whole Foods (NYSE: WFM), Weis Markets (NYSE: WMK), and small-cap player Ingles Markets (NASDAQ: IMKTA).
Shares of Fresh Market are up almost 27% year-to-date, and up over 49% in the last 12 months.
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