Here's Why Bank Of America Downgraded The Fresh Market

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In a report published Monday, Bank of America analyst Robert Ohmes downgraded shares of
The Fresh Market IncTFM
to Neutral from Buy with a $45 price target due to valuation reasons and uncertainties over the company's prospects. Ohmes noted that the company's 3.0 percent comp gains in the fourth quarter were supported by a 3.7 percent gain in traffic, despite an estimated 300 basis point same-store sale headwind from competitor store openings in its major markets. Ohmes added that uncertainty exists over accelerating same-store sales headwinds from further competitor store openings and potential margin pressures given the company's changing promotional cadence and traffic-driving strategy. In addition, the analyst cited a "secular store growth outlook" and the transition to a new CEO as headwinds that adds to the uncertainty. Bottom line, Ohmes argued shares are "fully valued" given that they are currently trading at a 19-20x P/E versus a 10 percent to 12 percent earnings per show growth outlook.
Posted In: Analyst ColorAnalyst RatingsBank of AmericaFresh MarketOrganic GrocersretailersRobert Ohmes
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