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Kroger Hits Intra-Day Year High; Analysts Divided On Price

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Kroger (NYSE: KR) hit a 52-week high last Friday in intra-day trading, but analysts were divided at the current valuation.

Kroger on Thursday posted adjusted quarterly earnings of $1.09 per share, up more than 18 percent from a year earlier and $0.04 ahead of estimates. Sales grew 10 percent to nearly $40 million.

UBS' Jason DeRise is still Neutral on the stock. "Many investors ask why Kroger doesn't trade in line with Wal-Mart," DeRise said in a note. But DeRise said Kroger's lower return on invested capital "holds the company back."

In raising his target to $53, from $49.66, DeRise noted Kroger's long-term growth of 11 percent and nearly a dozen recent quarters of meeting or beating street views.

Broadly, however, DeRise said on-going growth of non-traditional food retailers like super centers, club and dollar stores will continue to erode the pricing power of traditional grocers like Kroger.

Barclay's Meredith Adler maintained an Equal-Weight rating but raised her target to $48, from $40.

More bullish is Deutsche Bank's Karen Short, who said the $2.44-billion acquisition of North Carolina grocer Harris Teeter in January "could serve as a vehicle" for expansion into the faster-growing Southeast region.

Kroger expects to save $40 million to $50 million per year by combining the two operations and attributed part of its recent quarterly performance to the merger.

Short maintains a Buy rating and raised her target to $55 a share, from $50.

JP Morgan's Ken Goldman called Kroger "one of our favorite stocks for the rest of 2014," boosting his target to $56, from $53 and maintaining a Buy rating.

Kroger closed at $49.84 on Friday.

Latest Ratings for KR

DateFirmActionFromTo
May 2018Bank of AmericaUpgradesNeutralBuy
Apr 2018Credit SuisseInitiates Coverage OnOutperform
Mar 2018BMO CapitalMaintainsMarket PerformMarket Perform

View More Analyst Ratings for KR
View the Latest Analyst Ratings

Posted-In: Barclays Deustche Bank Jason DeRise JP MorganAnalyst Color Price Target Reiteration Analyst Ratings

 

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