Whole Foods Market (WFM) PT Slashed to $35 at BMO Capital; 'Comp Trends and Visibility Remain Challenging'

BMO Capital analyst Kelly Bania reiterated her Market Perform rating and cut her price target on Whole Foods Market (NASDAQ: WFM) to $35.00 (from $45.00) following Q3 results, noting comp trends and visibility remain challenging.

Bania commented, "While comp trends appear to be impacted by negative press related to the company’s audit in NYC related to weights and measures (began late June), we believe ongoing competitive pressures continue to remain the key challenge as comps remain weak despite easier comparisons, a potential benefit from refreshes/remodels (though the comp impact was not disclosed) & ongoing marketing efforts. Produce deflation also remained a headwind, though in part due to Whole Foods’ own price investments (still in ~5 regions) and the company’s affinity program (still in test phase as WFM tweaks the program). Our F2016E EPS shifts down to $1.77 (from $1.90 prior) as comp visibility remains increasingly difficult (we’ve lowered our F2016 forecast to 3%, down from 5% prior), and due to a back-half weighted store opening schedule in F2016, we’ve lowered our square footage down to 7.5% from 9%-10% prior offset partially by lower SG&A growth of 7% (supported solid expense management)."

For an analyst ratings summary and ratings history on Whole Foods Market click here. For more ratings news on Whole Foods Market click here.

Shares of Whole Foods Market closed at $40.82 yesterday.

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