Whole Foods: Near-Term Volatility Likely

In a report published Thursday, analysts at Morgan Stanley maintained their Overweight rating on

. The price target was lowered from $62 to $56. The company posted lower than expected comps for 2Q. The 2Q comps came in below the estimates and the consensus. "Management attributed the shortfall to continued increased competition, adverse weather, and a higher level of cannibalization this quarter in Chicago and FL markets," the analysts said. Morgan Stanley expects the stock to pull back following this comps miss, especially given the recent macro concerns and the higher than forecasted comps posted for the last 3 quarters. On a more positive note, the company reported its gross margin higher than the forecasts, while the EPS was in-line with the estimates and the consensus. The company has also maintained its guidance for FY2015. The analysts believe that the gross margins for the quarter reflect continued control on price reductions. Whole Foods also announced its intention to launch a new store concept, aimed at complementing its core stores. However, there is limited information regarding this new concept, apart from the fact that it is intended to be "convenient, transparent & values-oriented with millennial shoppers as its target customer." "With such little information, it's hard to gauge how exactly this alternate concept will fit into WFM's longer term outlook," the analysts added.