UPDATE: BMO Capital Markets Downgrades Harris Teeter Supermarkets to Market Perform, Lowers PT

In a report published Friday, BMO Capital Markets downgraded its rating on Harris Teeter Supermarkets HTSI from Outperform to Market Perform, and lowered its price target from $50.00 to $38.00. BMO Capital Markets noted, “Last night, HTSI reported 1Q13 EPS of $0.46 vs. our $0.61 EPS and consensus of $0.58. Until this miss, HTSI had disappointed only one time in seven years (in Oct. 2011, missing our EPS by $0.14). Given HTSI's strong track record, we would normally overlook last night's miss, but unfortunately, many of the headwinds in 1Q13 will pressure EPS throughout the remainder of FY13, so we are reducing our EPS too meaningfully to justify maintaining our Outperform rating. Our revised price target is $38 and our new rating is Market Perform. Our price target values HTSI at NTM EV/EBITDA of 5.5x – slightly above conventional peers – which we continue to believe is justified for a wide range of reasons. In addition, the speculation of a potential strategic review should provide support to HTSI.” Harris Teeter Supermarkets closed on Thursday at $41.49.