Goldman Sachs Maintains Rating, PT On KR

Goldman Sachs, after meeting with the company's management at investor meetings last week is maintaining its Neutral rating and $25 price target on The Kroger Co. KR, despite the confidence showcased at the meetings. In the report, Goldman Sachs writes, “[confidence was] illustrated by: 1) commentary that inflation is being passed on by competition and accepted by consumers as they remained comfortable with their 3%-4% ID sales plan which assumed only 1%-2% inflation even as gas was escalating, 2) aggressive buyback activity in early Q1 across $1 bn authorization, and 3) bolder call outs of consistent share gains and shareholder distributions. While near-term supports our above-consensus Q1 EPS $0.65 estimate, mgmt was mindful to keep expectations in check as it related to margins; they reiterated their EPS outlook that called for Q2 and Q3 growth rates to register below the annual run rate of 6%-8%, which is not reflected in consensus estimates.” KR closed Friday at $24.54.