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UPDATE: UBS Upgrades SUPERVALU (SVU) to Neutral; Covenant Risk is Removed; Chance of Turnaround Improved

July 12, 2012 8:10 AM EDT Send to a Friend
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Price: $9.43 -0.53%

Rating Summary:
    2 Buy, 9 Hold, 2 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 20 | Down: 23 | New: 13
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(Updated - July 12, 2012 10:28 AM EDT)

UBS upgraded SUPERVALU (NYSE: SVU) from Sell to Neutral, price target lowered from $4.50 to $4.00.

Analyst, Jason DeRise, said, "SVU announces big changes, improves chance of turning around in Long-Term...Significant operational challenges persist in Near-Term"

"We update to Neutral because the covenant risk is removed, but would not recommend buying given the operational headwinds. Our target price implies a PE of 6.3x 2012CY EPS and 5.7x 2012CY EV/EBITDA estimates. We no longer assume a 30% weighting to the bear case covenant breach scenario, but no longer assume a 20% weighting to the bull case SOTP."

DeRise lowers FY13 EPS estimate from $1.23 to $0.63 and FY14 from $1.25 to $0.64.

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

Shares of SUPERVALU closed at $5.29 yesterday.

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