Jefferies Upgrades Kroger to Buy
Analyst Rob Dickerson bullish on Kroger stock
Investing in Kroger: A Profit-Focused Approach
Jefferies analyst Rob Dickerson has upgraded Kroger (KR) to Buy from Hold with a price target of $73, up from $54. This comes as BMO Capital downgraded the shares this morning, creating differing opinions among analysts regarding the future of the grocery retailer.
Jefferies believes that if the Albertsons (ACI) deal closes, Kroger could see double-digit earnings growth and 30%+ free cash flow accretion potential through the optimization of Albertsons’ working capital. However, even if the deal falls through, Kroger still stands to benefit as it will keep $6 billion of debt raised for the merger, providing support for the stock and driving earnings upside through share buybacks.
In addition to the potential deal with Albertsons, Kroger has been experiencing improved foot traffic trends and a more profitable fuel business post-pandemic. These factors contribute to Jefferies’ positive outlook on the company’s future performance.
Current market performance shows Kroger down 0.9% (-1.47%) while Albertsons is down 0.37% (-1.86%).
Impact on Investors
Investors who follow Jefferies’ recommendation and buy Kroger stock could see significant gains if the company’s earnings and free cash flow reach the projected levels. Conversely, those who heed BMO Capital’s downgrade may experience some short-term losses.
Impact on the World
Kroger’s success could have a ripple effect on the grocery industry, potentially leading to changes in the way competitors operate. Additionally, if the company’s foot traffic trends continue to improve, it could signify a broader economic recovery post-pandemic.
Conclusion
Overall, Jefferies’ upgrade of Kroger reflects a positive outlook on the company’s future prospects. Investors should carefully consider the potential risks and rewards associated with investing in Kroger stock, keeping in mind the varying analyst opinions and market conditions.
