Jefferies Lowers Estimates & PT on SAFEWAY (SWY); Better Volumes Yet to Materialize

Jefferies maintains a 'Hold' on SAFEWAY (NYSE: SWY) price target cut from $24 to $20.

Jefferies analyst says, "We continue to believe that Safeway is doing the right things for its business including focusing on a number of initiatives to drive sales and loyalty. While we do believe these will eventually improve volumes, better results have yet to materialize and the difficult macros are still clearly weighing."

"We are maintaining our 4Q11 EPS estimate of $0.66, but trimming our FY12
estimate to $1.93 from $2.00. Our 4Q11 reflects higher fuel sales and the acceleration in ex-fuel IDs (raised ex. fuel IDs to 1.75% from 1.50%), but an extra 10 bps of gross margin pressure. Next year our $1.93 EPS estimate (down from $2.00) largely reflects less share repurchases and slight gross margin pressure offset by higher w/ fuel sales and a lower tax rate."

For more ratings news on SAFEWAY click here and for the rating history of SAFEWAY click here.

Shares of SAFEWAY closed at $17.67 yesterday.

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