The Bull-Bear Case For Whole Foods Is 'Fiercely Divided'

Credit Suisse’s Edward J. Kelly mentioned that Whole Foods Market, Inc. WFM was “one of the most controversial names in consumer with fiercely divided investor sentiment.”

Kelly maintained an Outperform rating on the company, with a price target of $40.

While the overall interest in the stock remains high, with investors not wanting to miss any inflection point in the story, the analyst noted that most investors were cautious.

“While there was some growing hope for improving sales trends on easing comparisons in June, the recent FDA headline has tempered that expectation,” Kelly stated.

Related Link: Jim Cramer Says 'You Want To Own' Whole Foods

Key Issues

The key issues on which the bulls and bears are divided include:

Price repositioning – whether Whole Foods Market would be able to reaccelerate comps by improving its value perception among customers.

1. Cost Cutting – whether the company would cut costs to fund price investments without compromising on its high service model.
2. 365 Store – “Is the 365 format positive for the long-term outlook?”
3. Competition – the impact of competition on the company.
4. Valuation – whether the stock’s valuation was too high.
5. Timing – whether this was the right time for investors to buy the stock.

“We continue to see a unique opportunity to own this leading specialty food retailer while still in the early stages of a repositioning that should reinvigorate growth,” Kelly said.