Barclays Sees Shares of Kroger (NYSE: KR) Range Bound As Investors Wait For Other Shoe To Drop, But...

June 15, 2012 1:45 PM EDT Send to a Friend
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Price: $45.35 -0.22%

Rating Summary:
    8 Buy, 7 Hold, 1 Sell

Rating Trend: = Flat

Today's Overall Ratings:
    Up: 26 | Down: 10 | New: 8
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Barclays maintains an 'Equalweight' on Kroger (NYSE: KR) price target of $24.00.

Analyst, Meredith Adler, made note that investors have been leary about supermarket chains and that shares of KR, Safeway (NYSE: SWY) and Supervalu (NYSE: SVU) are down year-to-date. Although, she points out that Kroger and Safeway didn't actually turn negative until late April. Adler cited several possibilities including inflation, weak volumes operating expenses leading to negative comps and then the company offering more pricing promotions.

"...As it turns out, KR's 1Q12 results were good, with EPS beating consensus by $0.05. A lower tax rate helped a bit, but most was a result of excellent expense control. The stock was rewarded for that upside surprise yesterday, with a 6.1% rise (vs. the S&P 500 +1.1%), though some was probably short covering."

Adler thinks five straight quarters with negative surprises would have gotten investors more involved, but at this point, they seemed sidelined, waiting for the other shoe to drop.

Barclays raises FY12 EPS Estimate from $2.32 to $2.38 and FY13 from $2.41 to $2.49.

For an analyst ratings summary and ratings history on Kroger click here. For more ratings news on Kroger click here.

Shares of Kroger closed at $22.58 yesterday.




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