UPDATE: Bank of America Raises PO to $18 on Safeway; Sale of Canada Assets Unlikely
Bank of America maintained Safeway (NYSE: SWY) with an Underperform rating and raised the price target from $15.00 to $18.00.
Bank of America commented, "Since hitting a low late July, SWY's stock has rallied in recent months we believe in part due to press speculation that SWY may sell its assets in Canada (CA). … [W]e evaluate seven key reasons that we have been hearing on why a sale of SWY CA might make sense. Our analysis of these factors leads us to believe that 5 of the 7 factors are unlikely valid reasons in favor of a sale, while only two are possibly valid reasons supportive of a potential sale. Our conclusion is that given an outlook for potentially peaking margins in CA due to an expectation for increasing competition in CA from discount food retailers, Canadian retailers may not be inclined to pay lofty acquisition premiums, making a transaction unlikely, in our view."
Safeway closed at $20.42 on Friday.
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