Deutsche Bank Downgrades SUPERVALU (SVU) to Hold, Sees Risks Amplified, Cuts Price Target
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Price: $32.49 --0%
Rating Summary:
1 Buy, 15 Hold, 1 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 13 | Down: 14 | New: 11
Rating Summary:
1 Buy, 15 Hold, 1 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 13 | Down: 14 | New: 11
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Deutsche Bank downgraded shares of SUPERVALU (NYSE: SVU) to a Hold rating from its previous rating of Buy and cut its price target from $10 to $7.50 following the release of its Q3 results.
The firm notes its downgrade is based on the fact that traffic looks to remain weak in 2012, a slowing inflation rate will make it more difficult to drive average ticket and comp ahead, and on the fact that Q4 earnings may disappoint given the implied ID sales improvement.
An analyst at Deutsche comments, "Our main concern was the -2.9% non-fuel ID’s, which came in weaker than our -2.0% est and the -2.4% Consensus. Within the comp, traffic in 3Q was down 460 bp YOY, a deteriorating trend from -380 bp in 2Q. Cycling LY’s ineffective promotions certainly weighed on traffic; however, we see little evidence that traffic trends in 4Q have picked up materially. We believe that growing competitive pressures and continued market share gains from better-positioned retailers like COST and KR are making it difficult for SVU to show progress on traffic, despite the improvements from transformation initiatives and its shift to a fair price + promotions strategy. "
Deutsche has reduced its FY12 and FY13 EPS estimates from $1.25 and $1.27 to $1.15 and $1.10.
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 $8.39 yesterday.
The firm notes its downgrade is based on the fact that traffic looks to remain weak in 2012, a slowing inflation rate will make it more difficult to drive average ticket and comp ahead, and on the fact that Q4 earnings may disappoint given the implied ID sales improvement.
An analyst at Deutsche comments, "Our main concern was the -2.9% non-fuel ID’s, which came in weaker than our -2.0% est and the -2.4% Consensus. Within the comp, traffic in 3Q was down 460 bp YOY, a deteriorating trend from -380 bp in 2Q. Cycling LY’s ineffective promotions certainly weighed on traffic; however, we see little evidence that traffic trends in 4Q have picked up materially. We believe that growing competitive pressures and continued market share gains from better-positioned retailers like COST and KR are making it difficult for SVU to show progress on traffic, despite the improvements from transformation initiatives and its shift to a fair price + promotions strategy. "
Deutsche has reduced its FY12 and FY13 EPS estimates from $1.25 and $1.27 to $1.15 and $1.10.
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 $8.39 yesterday.
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