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Kroger Co. (NYSE:KR) moved higher in early trading on Tuesday after BMO Capital Markets upgraded the grocery store stock to an Outperform rating after having it set at Market Perform
Analyst Kelly Bania and his team noted that the stock has pulled back on fear of increasing price investments across the space, but they think Kroger’s (KR) positioning in the industry will allow it to protect its gross margin rates even in a competitive environment. “Additionally, we see the pending KR-ACI deal as a win-win under either a deal or no-deal scenario, but we estimate higher year- one EPS accretion under a no-deal scenario,” updated Bania. Notably, Kroger (KR) holds $2.30 in cash per share, which is available for buybacks in the blocked ACI deal scenario.
BMO hiked FY25 and FY26 EPS estimates on Kroger (KR) and lifted its price target to $60, which is based on a 13X multiple of the firm’s FY26 EPS estimate.
Separately, Evercore ISI initiated a positive Tactical Trade or TAP on Kroger (KR) ahead of its F1Q earnings on June 20th with a view that absolute upside is likely to approach high single digits/ mid $50’s.
Analysts expect Kroger (KR) to report revenue of $45.1 billion and EPS of $1.37. Kroger has beaten EPS expectations in 16 straight quarters.
Shares of Kroger (KR) were up 1.67% in premarket action on Tuesday to $51.90 vs. the 52-week trading range of $42.10 to $58.34.
