UPDATE - UBS Initiates Coverage on Safeway (SWY) with a Sell; Don't See Enough Investing In Core Business
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Price: $35.10 --0%
Rating Summary:
4 Buy, 15 Hold, 0 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 8 | Down: 5 | New: 26
Rating Summary:
4 Buy, 15 Hold, 0 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 8 | Down: 5 | New: 26
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UPDATE - UBS initiates coverage on Safeway (NYSE: SWY) with a Sell rating. PT $20.
UBS analyst said, "We believe food retail is too competitive for a strategy focused on margin protection (maintaining high gross margin) and harvesting cash (capex below D&A for the core business). But, this is essentially what SWY is doing by opting to invest in tangential businesses and aggressively buying back shares. We believe that if SWY does not differentiate or grow square footage, it must shift to compete on price like Kroger (NYSE: KR) has. Otherwise, we expect continued share loss and declining profits."
"We estimate SWY core business share loss continues, causing group EBITDAR to fall -1% per year. We estimate it buys back shares to drive 8% EPS CAGR...Our EPS estimate is -2% below consensus on 12E and -6% below on 13E." (FY12 at $1.91 and FY13 at $1.98)
To see more ratings on SWY, Click Here
UBS analyst said, "We believe food retail is too competitive for a strategy focused on margin protection (maintaining high gross margin) and harvesting cash (capex below D&A for the core business). But, this is essentially what SWY is doing by opting to invest in tangential businesses and aggressively buying back shares. We believe that if SWY does not differentiate or grow square footage, it must shift to compete on price like Kroger (NYSE: KR) has. Otherwise, we expect continued share loss and declining profits."
"We estimate SWY core business share loss continues, causing group EBITDAR to fall -1% per year. We estimate it buys back shares to drive 8% EPS CAGR...Our EPS estimate is -2% below consensus on 12E and -6% below on 13E." (FY12 at $1.91 and FY13 at $1.98)
To see more ratings on SWY, Click Here
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