Sprouts Farmers Market’s stock market performance
Sprouts Farmer’s Market’s (SFM) stock market performance this year has been quite sensitive to the Whole Foods-Amazon (AMZN) deal that took place in mid-June. While the deal didn’t have a negative impact on SFM’s stock price initially, the price cuts that Amazon made at Whole Foods in late August hit Sprouts significantly.
The company had lost ~15% since the Whole Foods deal and ~14% since August 24, the day when Amazon announced price cuts at Whole Foods. According to a report from Thasos dated October 6, Trader Joe’s and Sprouts experienced the highest customer defection rates to Whole Foods in the initial weeks of price cuts.
A look at YTD performance of SFM and peers
Year-to-date, SFM still stands in the green with a 0.4% gain to date. In comparison, Kroger (KR) and Supervalu (SVU) are down 39% and 54% so far this year, respectively. Most of the decline in stock prices of these two companies is attributable to the pessimism around food retail after Amazon’s entry in this space. All the food retailers have underperformed the S&P 500 Index (SPX), which is up 15% YTD. The SPDR S&P Retail ETF (XRT), which invests 1.3% of its portfolio in SFM, has fallen ~7.8% YTD.
SFM’s stock continues to have a substantial upside
SFM is currently trading at $18.81 as of October 23, 2017, ~38% below its 52-week high price. Wall Street has assigned an average price target of $25, which indicates an upside of around 33% over the next one-year period.
Read the next section to know about the recent analyst actions on SFM and Wall Street’s recommendations for the company.