UPDATE: Deutsche Bank Initiates Coverage on Safeway with Buy Rating, $37 PT Ahead of Anticipated Turnaround

In a report published Thursday, Deutsche Bank analyst Karen Short initiated coverage on

with a Buy rating and $37.00 price target. In the report, Deutsche Bank “We are initiating coverage of SWY with a Buy rating and a $37 PT. In contrast to most of our Buy-rated names, SWY's ROIC performance has been dismal; nevertheless, we rate the stock a Buy for these reasons: 1) we believe SWY will aggressively repurchase shares beginning in FY14 (or earlier, depending on Canada sale timing); 2) on a pro forma basis ($2.8B lower debt, and 60M fewer shares) the stock looks extremely undervalued on SoTP – the current stock price reflects an EV/EBITDA for SWY retail of 4.1x – excessively washed-out, in our view; and 3) we believe management is keenly focused on improving ROIC, and we see significant opportunities to create value by rationalizing assets.” Safeway closed on Wednesday at $31.92.