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Kroger Faces Rating Downgrade from Wall Street after 2Q Results

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Sep. 13 2017, Updated 10:37 a.m. ET

Wall Street’s view on Kroger

A total of 26 Wall Street analysts cover Kroger (KR). Out of these analysts, the stock has received a “buy” rating from 31% of analysts. RBC Capital is among the brokers who continue to have a “buy” rating on the stock. 58% of analysts including JP Morgan, Telsey Advisory Group, and Morgan Stanley rate the company as a “hold.” 12% of analysts including Stephens & Co suggest selling the stock. The company has more “sell” ratings than competitors Walmart (WMT) with 9% sell ratings, as well as Sprouts Farmers Market (SFM) and Supervalu (SVU), which don’t have any “sell” ratings.

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Ratings

Kroger’s analyst ratings have come down to 2.7 as compared to 2.6 before the 2Q results and 2.3 before the 1Q results. In comparison, Walmart, Sprouts Farmers, and Supervalu are rated 2.5, 2.3, and 2.4, respectively. Ratings are on a scale of one (strong buy) to five (sell). Deterioration in ratings has been a result of the company’s falling margins and a difficult near-term outlook.

A look at target price

Kroger’s average target price has been revised downwards to $25.23 as compared to $26.14 before the results. However, the stock continues to have upside of 20% over the next 12 months. Individual price targets on the company range between $20 to $34.

Investors looking for exposure to Kroger through ETFs can invest in the First Trust Consumer Staples AlphaDEX Fund (FXG), which invests 3.2% of its portfolio in the company.

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