UBS Maintains a 'Buy' on Harris Teeter (HTSI); Taking Share, Growing Margins

UBS maintains a 'Buy' on Harris Teeter (NYSE: HTSI) price target lowered from $50 to $48.

Analyst, Jason DeRise, said, "HTSI differentiated positioning and new store productivity are driving share gains while gross margin expands. Price competition has stepped up by HTSI’s main competitors (Wal-Mart (NYSE: WMT) and Delhaize) and at the same time HTSI’s gross margin expanded. Despite this, HTSI reported the fastest comp sales growth of the traditional food retailer to report thus far."

"We have slowed our 5yr comp sales CAGR by ~60bps, but increased gross margin by an accumulative 50bps, leaving EPS broadly unchanged. While we continue to believe HTSI will reduce gross margins to drive faster sales growth, we now believe our prior estimates overstated the aggressiveness of the strategy." (UBS raises FY12 EPS esitmate by $0.02 to $2.32, but FY13 lowered by $0.01 to $2.59.

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

Shares of Harris Teeter closed at $37.85 yesterday.

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