Why Did Bernstein Upgrade Kroger?

The upgrade

Today, Bernstein upgraded Kroger (KR) from “market perform” to “outperform,” and it also raised its 12-month price target to $33, which represents a potential upside of 37.1% from its stock price of $24.07 on May 20.

As CNBC reported, Bernstein has stated that Kroger’s weak same-store sales growth and margin in its recent quarter have made investors anxious. However, Bernstein believes Kroger is well positioned to deliver on its long-term Restock Kroger initiatives, positioning itself as a serious omnichannel player.

Why Did Bernstein Upgrade Kroger?

Other analysts’ recommendations

Since Kroger posted its fourth-quarter earnings on March 7, several analysts have lowered their price targets:

  • UBS from $30 to $27
  • Jefferies from $34 to $29
  • Morgan Stanley from $27 to $26
  • J.P. Morgan from $30 to $25
  • Credit Suisse from $33 to $30

Of the total 26 analysts who follow Kroger, 38.5% have a “buy” rating while 50.0% say “hold” and 11.5% have a “sell” rating. On average, analysts have given Kroger a 12-month price target of $28.39, which represents upside potential of 18.0% from its stock price of $24.07.

Peer comparisons

Of the total 32 analysts covering Walmart (WMT), 38.5% have a “buy” rating while 50% say “hold” and 11.5% say “sell.” Wall Street has given Walmart a 12-month price target of $110.32, which implies an upside potential of 8.7% from its price target of $101.52.

Of the 26 analysts following Target (TGT), 38.5% say “buy” while 61.5% have a “hold” rating. On average, analysts have a 12-month price target of $86.60 for TGT, which represents a potential upside of 20.2% from its stock price of $72.08.

And of the 29 analysts who follow Costco (COST), 58.6% have a “buy” rating while 41.4% have a “hold” rating. On average, Wall Street has given Costco a 12-month price target of $250.58, which implies a 12-month price target of 0.7% from its stock price of $248.9.