Supportive Grocery Trends And Albertsons' Transformation: Analyst's Projections For 1Q23 Earnings

Telsey Advisory Group analyst Joseph Feldman reiterated a Market Perform rating on the shares of Albertsons Companies Inc ACI with a price target of $27.25.

Albertsons will report 1Q23 earnings on Tuesday, July 25. Given its pending merger with Kroger Co KR, the company will not host an earnings call or provide guidance.

The analyst maintains slightly above consensus 1Q23 sales and profit projections, given supportive macro trends for the grocery industry.

The analyst believes 1Q23 grocery trends remained solid, evidenced by the latest data that said U.S. retail sales of food & beverages were +5.0% in March, +3.0% in April, and +3.7% in May.

Albertsons’ transformation should continue to drive market share and earnings growth for multiple years, said the analyst.

The company should continue to benefit from the structural shift in consumer shopping behavior toward digital and increased at-home consumption, as well as transformative initiatives, like enhanced merchandising, added the analyst.

However, the analyst said the company’s valuation remains dependent on its potential merger with Kroger.

The analyst is supportive of Kroger’s acquisition of Albertsons, but the uncertainty related to the number of potential store closures, government approvals, valuation, and other merger-related factors keep the stock in neutral.

The analyst said grocery industry trends should remain solid in 2023, although expects to see sales growth moderate in 2H23 related to inflation easing.

Price Action: ACI shares are trading lower by 0.07% at $21.99 on the last check Tuesday.