Attention Investors: Sprouts Farmers Market Is Morgan Stanley's Newest 'Best Idea'

In a report published Tuesday, Morgan Stanley analyst Vincent J Sinisi added

to the "Morgan Stanley Best Ideas List" as now is a "very attractive" time to buy into one of retail's best growth stories. From a valuation perspective, now is a good time to buy shares, Sinisi argued. Shares have pulled back following its 2015 guidance which the analyst noted is conservative, calling for approximately 20 percent earnings per share growth versus near 50 percent each of the past two years. "The market does not fully appreciate Sprouts Farmers Market's earnings power, whereby comp and productivity upside lead to further expense leverage across the income statement and greater than expected earnings per share growth," Sinisi wrote. "We estimate that each additional one percent in comps could lead to an incremental 3.5 percent in earnings per share growth for 2015. Sprouts Farmers Market has a history of exceeding consensus expectations, which we expect to continue in 2015. From a fundamental perspective, Sprouts Farmers Market is a direct natural and organic play in an industry that is poised to record 10 percent compounded annual growth, reaching over $110 billion by 2020. The company is a differentiated, direct participant in the fast-growing market and has a secular tailwind supporting long-term expansion. Finally, Sinisi noted that a prior private equity ownership overhang has been removed with

exiting its stake as of March 10th. Shares are Overweight rated with a $40 price target.