UPDATE: Deutsche Bank Initiates Coverage on SUPERVALU with Hold Rating, $8 PT on Current Valuation

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

with a Hold rating and $8.00 price target. In the report, Deutsche Bank “We are initiating coverage of SVU with a Hold rating and an $8 PT, which values SVU at an FY15E EV/EBITDA of 5.8x. Factors underpinning our Hold rating include: 1) Consensus, DB and SVU-provided EBITDA estimates – while likely achievable – are not conservative, and already reflect meaningful improvement in margins at conventional retail and Save-A-Lot, in our view. 2) ROIC has been declining since 4Q07 (ending 2/07), so while new management is clearly focused on improving ROIC, valuation already reflects this improvement. 3) Because EV/EBITDAR valuation has expanded while ROIC has been declining, the relative valuation multiple has also expanded.” SUPERVALU closed on Wednesday at $8.31.