UPDATE: Deutsche Bank Initiates Coverage on Spartan Stores on Fair Valuation

In a report published Thursday, Deutsche Bank analyst Karen Short initiated coverage on

with a Hold rating and $21.00 price target. In the report, Deutsche Bank “We are initiating coverage of SPTN with a Hold rating and a $21 price target. Our price target values the stock at an EV/EBITDA of 5.9x, and a P/E of 12.2x. We have a Hold rating on the stock for 3 reasons: 1) while ROIC, EV/EBITDAR and relative valuation trends have – for the most part – remained fairly stable, the NAFC merger adds some uncertainty; 2) pro forma valuation appears to already reflect the benefit of estimated NAFC synergies, and on a pro forma basis, SPTN is trading at a premium to most conventional peers; and 3) while SPTN has integrated past acquisitions extremely well, they were much smaller in scale compared to NAFC.” Spartan Stores closed on Wednesday at $22.35.