Evercore on Albertsons (ACI): 'Cultivating Customers; Cost/Macro Headwinds Remain'
Evercore ISI analyst Michael Montani reiterated an In Line rating and $22.00 price target on Albertsons Companies Inc. (NYSE: ACI)
The analyst comments "Albertsons is advancing their customer for life strategy amidst a challenging grocery backdrop. Kroger’s enhanced divestiture package suggests odds are still over 50% for court win (in our view) with a potential judge’s decision likely in Sept-Nov. Bulls point to sticky pharmacy/loyal household growth (both +16% YoY) that should benefit the business as repeat visits drive higher lifetime value. Bears point to near term pressure from pharmacy mix, & GLP-1, shrink, and tech/digital lingering in 1H24. Albertsons cost control productivity muscle and central purchasing are a partial offset. We are trimming our F1H EPS to reflect mix/tech headwinds with stabilizing 2H EPS as productivity builds and compares ease (inflation/SNAP/Cali rent). We view the KR (OP rated) – ACI merger as likely to close by year end ’24, with our $22 ACI Base Case reflecting a probability weighted Bull vs. Bear Case and fundamental outlook. We are hosting an expert webinar with Nielsen’s Lorelei Bergin on 4/26 at 10am for a timely update on hot button topics of price vs. volume, promotions, innovation and GLP-1 impact. "
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Shares of Albertsons Companies Inc. closed at $20.23 yesterday.