Kroger Hits Intra-Day Year High; Analysts Divided On Price
Kroger (NYSE: KR) hit a 52-week high last Friday in intra-day trading, but analysts were divided at the current valuation.
Kroger on Thursday posted adjusted quarterly earnings of $1.09 per share, up more than 18 percent from a year earlier and $0.04 ahead of estimates. Sales grew 10 percent to nearly $40 million.
UBS' Jason DeRise is still Neutral on the stock. "Many investors ask why Kroger doesn't trade in line with Wal-Mart," DeRise said in a note. But DeRise said Kroger's lower return on invested capital "holds the company back."
In raising his target to $53, from $49.66, DeRise noted Kroger's long-term growth of 11 percent and nearly a dozen recent quarters of meeting or beating street views.
Broadly, however, DeRise said on-going growth of non-traditional food retailers like super centers, club and dollar stores will continue to erode the pricing power of traditional grocers like Kroger.
Barclay's Meredith Adler maintained an Equal-Weight rating but raised her target to $48, from $40.
More bullish is Deutsche Bank's Karen Short, who said the $2.44-billion acquisition of North Carolina grocer Harris Teeter in January "could serve as a vehicle" for expansion into the faster-growing Southeast region.
Kroger expects to save $40 million to $50 million per year by combining the two operations and attributed part of its recent quarterly performance to the merger.
Short maintains a Buy rating and raised her target to $55 a share, from $50.
JP Morgan's Ken Goldman called Kroger "one of our favorite stocks for the rest of 2014," boosting his target to $56, from $53 and maintaining a Buy rating.
Kroger closed at $49.84 on Friday.
Latest Ratings for KR
|Sep 2016||Barclays||Initiates Coverage on||Equal-Weight|
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