Piper Jaffray Reiterates Overweight on Smart & Final Stores (SFS) Following 2Q
Piper Jaffray maintained an Overweight rating on Smart & Final Stores (NYSE: SFS), and cut the price target to $15.00 (from $18.00), following the company's 2Q earnings report. Management is now targeting deflation in the back half of 2016 of 2% in both Q3 and Q4 or a decline of 1.7% for the full year.
Analyst Sean P. Naughton commented, "We are maintaining our Overweight rating on Smart & Final shares, but acknowledge that deflation is lasting longer than anticipated. While we have highlighted this risk across the grocery space, we did not believe the ramifications would be this large for Smart & Final. Last night, SFS reported comps that were down 30bp versus street expectations +1.3%. Management cited deflation as the primary headwind and was forced to reduce EPS and EBITDA guidance. Overall, we expect the shares to be down, but still believe the issues of new store acquisitions and deflation should prove transitory and the company can return to growth in 2017."
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Shares of Smart & Final Stores closed at $15.03 yesterday.