Piper Jaffray Raises Price target as Whole Foods Market (WFM) Benefits From a Better than Expected Tax Rate
Piper Jaffray reiterated a Neutral rating on Whole Foods Market (NASDAQ: WFM), and raised the price target to $32.00 (from $30.00), following the company's 4Q earnings report. Whole Foods reported earnings ahead of expectations driven largely by a better than expected tax rate, share repurchases and solid expense control. WFM delivered $0.46/shr in earnings versus consensus of $0.40/shr.
Analyst Sean Naughton commented, "Earlier tonight, Whole Foods reported earnings ahead of expectations driven largely by a better than expected tax rate, share repurchases and solid expense control. In terms of topline, we are encouraged by improvement in the 2 year transaction, but note that it did come at the expense of a material investment in gross margin and was only able to hold the 2 year comp stack coming out of Q4 at +2.9%. Despite our strong affinity for the category and the Whole Foods experience, we remain concerned about negative same store sales, increasing competition from lower cost players and high single digit square footage growth. We reiterate our Neutral rating. PT to $32 from $30 based on 8x (unchanged) CY16E EV/EBITDA."
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Shares of Whole Foods Market closed at $28.87 yesterday.