Kroger's Price Targets Cut Post-Q3: Analysts Adjust Estimates Amid Sales Dip And Market Challenges

Several analysts lowered the price target of Kroger Company KR following its Q3 results.

Yesterday, the retail giant reported a sales decline of 0.7% year-on-year to $33.96 billion, marginally beating the analyst consensus estimate of $33.92 billion. 

The company raised the lower end of its full-year adjusted EPS guidance, revising the range from $4.45-$4.60 to $4.50-$4.60 versus an estimate of $4.53.

Stephens analyst Ben Bienvenu cut the price target to $50 from $52 while maintaining the Equal-Weight rating.

The analyst reduced estimates for FY23 adj. EPS and adj. EBITDA estimates to $4.55 (from $4.58) and $7.99 billion (from $8.05 billion), respectively.

Also, Bienvenu trimmed FY24 adj. EPS and adj. EBITDA estimates to $4.41 (from $4.58) and $8.12 billion (from $8.28 billion), respectively. 

BMO Capital Markets analyst Kelly Bania reiterated the Market Perform rating and target price of $45.

Looking forward, the analyst expects 2024 to be tougher given the weak inflation outlook, expected more muted LIFO and fuel impacts, and even despite strong alternative profit growth, now projected to contribute one-third of KR's EBIT.

The analyst reduced estimates for merchandise same-store sales decline of 0.5% (vs. growth of 0.5% prior) and revenue of $36.957 billion (from $37.301 billion) in Q4.

Moreover, Morgan Stanley lowered the price target to $46 from $48, maintaining an Equal-Weight rating.

Price Action: KR shares are trading higher by 0.17% at $44.34 on the last check Friday.

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