Sprouts Farmers Market Stock Rose after Its Q2 2018 Results


Aug. 7 2018, Updated 6:32 a.m. ET

Sprouts Farmers Market stock rose

Despite delivering average results, Sprouts Farmers Market (SFM) stock traded higher after the second-quarter earnings on August 2. The share price rose as much as 15.5% during trade and closed at $23.35 on August 2, which was ~12.4% ahead of the previous day’s closing price.

Investors seem to be positive about Sprouts Farmers Market’s strong business model and consistent performance. The company hasn’t been fazed by Amazon’s (AMZN) entry into the grocery space after the acquisition of Whole Foods last year.

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What boosted the stock more was management’s decision to increase the guidance. While management reaffirmed most of the guidance for fiscal 2018, it increased the lower end of the EPS outlook. Sprouts Farmers Market expects the fiscal 2018 EPS to be $1.24–$1.28 compared to $1.22–$1.28 guided earlier.

Analysts’ target prices

At least four analysts raised their target price for Sprouts Farmers Market after its results on August 2. The analysts were UBS (from $27 to $28), JPMorgan Chase (from $26 to $28), Jefferies (from $23 to $26), and Credit Suisse (from $23 to $24). However, there weren’t any rating changes for Sprouts Farmers Market.

Sprouts Farmers Market is covered by 22 Wall Street analysts. Analysts rate the stock as a 2.2 on a scale of one (strong buy) to five (sell). Walmart (WMT) and Kroger (KR) are each rated as 2.4.

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Among the analysts covering Sprouts Farmers Market, 50% of the analysts, including Citigroup and Northcoast Research, rate the stock as a “buy,” 45% of the analysts, including Gordon Haskett and Credit Suisse, rate the stock as a “hold,” while 5% of the analysts, including Goldman Sachs, rate the stock as a “sell.” None of the analysts rate Walmart as a “sell.”

More upside

Analysts see more upside for Sprout Farmers Market stock. Analysts set an average target price of $26.72, which indicates an upside of ~14%.


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