Smart & Final Stores (SFS): Cutting Estimates on Deflation...Again - Guggenheim
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Guggenheim analyst, John Heinbockel, reiterated his Buy rating on Smart & Final Stores (NYSE: SFS) shares but cut the price target to $17 to reflect the ongoing adverse impact of product cost deflation.
Deflation is running at 2% in the 3Q and likely to persist through mid-2017. 2016E EBITDA gets cut by $11M to $181M and 2017E goes to $194M. This represents the second significant cut in 2 quarters but the analyst thinks it should be the last.
The PT drops to $17 from $19 but the BUY rating stays on the belief that “reflation” should occur in the next 6-9 months.
Shares of Smart & Final Stores closed at $13.45 yesterday.
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