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SuperValu's Target Price Revision Impacted Grocery Stocks

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SuperValu's Target Price Revision Impacted Grocery Stocks PART 1 OF 2

Telsey Advisory Lowered SuperValu’s Target Price

Telsey Advisory cut SuperValu’s target price

On October 16, 2017, Telsey Advisory lowered SuperValu’s (SVU) target price from $29 to $24. The brokerage firm cited ongoing margin pressure as the key reason behind the revision. SuperValu is expected to release its 2Q17 results on October 18, 2017.

Revision impacted SuperValu stock

The price target revision drove down SuperValu’s stock price 6.9% on October 16. The news took the entire grocery industry by storm. Kroger (KR), Sprouts Farmers Market (SFM), Ingles Market (IMKTA), and Natural Vitamin Grocers Cottage (NGVC) fell 4%, 2.6%, 4.2%, and 9.6%, respectively.

Telsey Advisory Lowered SuperValu’s Target Price

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It must be noted that the upheaval was driven by a target price revision. Telsey Advisory kept its “market perform” rating on SuperValu stock.

SuperValu is a strong stock. The company, which is covered by ten Wall Street analysts, is rated a 2.5 on a scale of one (strong buy) to five (sell).

Of the analysts, 30% recommended a “buy” and 70% recommended a “hold.” There aren’t any “sell” recommendations on the stock.

SuperValu has a substantial upside as well. Analysts are looking for an 84% rise in SuperValu’s stock price. As of October 16, the company is trading at $18.81. It has been assigned an average target price of $34.56.

ETF investors wanting to add exposure to SuperValu can consider the SPDR S&P Retail ETF (XRT), which invests ~1.2% of its portfolio in the company.

In the next part, we’ll discuss why grocery stocks have become so sensitive.

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