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Why Supervalu Stock Has an Upside of More than 75%

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Wall Street’s view on SVU

Ten Wall Street analysts cover Supervalu’s (SVU) stock. The company received a neutral rating of 2.5 from Wall Street. Ratings are on a scale of 1 (strong buy) to 5 (sell).

30% of the analysts who track SVU recommend buying the stock while 70% suggest holding it. There haven’t been any “sell” recommendations on the stock since August 2015.

Morgan Stanley, Telsey Advisory Group, and Deutsche Bank recommend holding SVU while Pivotal Research and RBC Capital suggest buying it. There have been no ratings changes on the retailer over the past year and a half.

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How are peers rated?

Supermarket chains Kroger (KR) has received a neutral rating of 2.6. Of the 26 analysts tracking KR, ~31%  have given a “buy” rating. Of the remaining, 58% recommend holding the stock while 12% suggest selling it.

Among the wholesalers, Sysco (SYY) with 41% “buy” ratings and 53% “hold” ratings, is rated a 2.5. United Natural Foods (UNFI), with 25% “buy” recommendations and 55% “hold” recommendations, is rated 2.9.

Supervalu’s stock is expected to rise 77% over the next year

Wall Street looks quite positive on Supervalu. Analysts are expecting a 77% jump in the company’s stock price. SVU, which is currently trading at $19.87 (as of October 13) has been assigned a target price of $35.19. Individual target prices on the company range between $20 and $55

SVU has a better upside than other retailers and wholesalers. Though it’s lower than SVU, supermarkets Kroger and Sprouts Farmers also have substantial upsides of 10% and 40%, respectively. Wholesalers Sysco and United Natural Foods are, however, likely to see moderate rises of 1% and 4% in their stock prices over the next year.

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

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