Piper Jaffray Cuts Price Target on Sprouts Farmers Market (SFM); Remains Neutral
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Piper Jaffray maintained a Neutral rating on Sprouts Farmers Market (NASDAQ: SFM), and cut the price target to $21.00 (from $28.00), following the company's 2Q. Traffic grew 3.5% in the quarter, bouncing back from 2.4% in Q1 and accelerating 170bp on the twoyear stack trend.
Analyst Sean Naughton commented, "While Q2 comps were largely in line with the Street despite stronger than expected deflation, guidance was trimmed as deflation continues to worsen. Importantly, it appears competition is heating up as retailers are beginning to promote more aggressively and pass along these savings to customers. We continue to fear that the margin benefits experienced in the onset of deflation have subsided as the gap between retail prices and product costs closes, putting pressure on profitability for all industry participants."
Shares of Sprouts Farmers Market closed at $22.95 yesterday.
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