UPDATE: Goldman Sachs Upgrades SUPERVALU to Neutral Following Share Selloff
Goldman Sachs upgraded its rating on SUPERVALU (NYSE: SVU) from Sell to Neutral but lowered its price target from $5 to $3.
Goldman Sachs noted, "We are upgrading SVU to Neutral from Sell as the recent sell-off leaves the risk-reward ratio more balanced. We continue to see a combination of secular and cyclical headwinds converging with SVU's higher financial leverage to pressure results and limit free cash flow available to shareholders. However, the market appears to be discounting this scenario with the shares now trading at an 8% discount to the peer group at 5.7X CY13 pension-adj. EV/EBITDA and a 13% discount on a straight EV/EBITDA valuation of 4.1X. Since adding SVU to the Sell List on April 29, 2012, the stock is -62% vs. the S&P -3%; and -75% vs. S&P +3% over the past year."
SUPERVALU closed at $2.32 on Friday.
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