UPDATE: Goldman Sachs Downgrades SUPERVALU to Sell, Lowers PT as Supermarkets Face Mounting Headwinds

In a report published Monday, Goldman Sachs analyst Stephen Grambling downgraded the rating on

from Neutral to Sell, and lowered the price target from $8.00 to $6.00. In the report, Goldman Sachs noted, “On November 17, we downgraded SVU to Sell from Neutral with 13% downside risk to our new $6, 12-month price target vs. 1% downside for our coverage. While we have been encouraged by the new management team's success in effecting change, we believe cuts to food stamps (SNAP benefits), potential reductions to the transition service agreement, and encroaching competition will likely overwhelm operational improvements. With the shares now trading above the historical P/E average and roughly in line with peers, we expect future downward revisions to consensus estimates will likely drive a re-rating of the shares to a more normalized level. As a result of our Sell rating on SVU and KR, we now move from a Neutral to a Cautious coverage view for the supermarkets.” SUPERVALU closed on Friday at $6.88.