Oppenheimer Hikes Whole Foods Estimates

Oppenheimer increased Whole Foods Market

stock price target to $38 from $36 on Monday. The increase was due to Oppenheimer seeing improving WFM trends in comparable stores sales. In Monday's analyst brief piece, Oppenheimer also updated their forecasts to reflect the likely completion of the $1 billion in the company's debt-financed buybacks in FY2016. The firm had maintained its Outperform rating on the stock. There was also an increase of its earnings estimates to $1.54 from $1.50 per share for FY2016. Investors will be pleased with any stabilization in two-year comp trends. "Recent macro and other datapoints may also suggest Whole Foods could point to some continued stabilization based on commentary from leading suppliers and overall improving trends in the grocery space", the firm noted. Two-year comp trends had stabilized over the latest five-week period when the Whole Foods had reported its Q4 results in November. The firm believes management will follow through with repurchasing shares. A share rally may only be the beginning if stabilization continues. "Sentiment toward the company's prospects is quite downbeat in our investor conversations lately," Oppenheimer said in the analyst note. The firm also noted Whole Foods's M&A speculation and fundamental improvement. "We believe the recent move higher is fundamentally driven vs. investor speculation on a takeout. In our view, the WFM brand is significantly undervalued, and M&A does provide downside support for shares," Oppenheimer said. Ahead of Whole Food's potential for key company initiatives and stabilization to set in, investors could expect to see the company's shares adding to the 15 percent gain that has occurred since December, if the steady growth continues, WFM shares are up about 15 percent since early December. In the year prior, shares jumped more than 55 percent.