Albertsons Will Report Continued Solid Q3 Earnings Aided By Macro Trends, Says Analyst
Benzinga · 01/06/2023 13:59
- Telsey Advisory Group analyst Joseph Feldman has reiterated a Market Perform rating on the shares of Albertsons Companies Inc (NYSE:ACI) with a price target of $27.25.
- The analyst expects continued solid 3Q22 results, given supportive macro trends for the grocery industry.
- Elevated at-home consumption, high inflation, structural changes in eating habits, including healthier options, and gains from company-specific initiatives, including private brands, loyalty, and digital, are likely to help growth, said the analyst.
- The analyst believes 3Q22 grocery trends remained solid, evidenced by the latest data, including U.S. retail sales of food & beverages were 7.2% in September, 6.6% in October, and 8.8% in November.
- Food-At-Home CPI was 13.0% in September, 12.4% in October, and 12.0% in November.
- The solid trends support the analyst's raised 3Q22 ID sales projection and above-consensus adjusted EBITDA forecast.
- Feldman believes Albertsons' transformation should continue to drive market share, earnings growth, and free cash flow for multiple years.
- The analyst said the company should continue to benefit from the structural shift in consumer shopping behavior toward digital and increased at-home consumption, as well as transformative initiatives.
- Albertsons' valuation remains dependent on its potential merger with Kroger Company (NYSE:KR), said the analyst.
- The analyst supports Kroger's acquisition of Albertsons, but there remains uncertainty related to the special dividend of $6.85 and the number of potential store closures.
- The analyst raised 3Q22 ID sales projection to 5.5% from 3.5% versus the FactSet consensus (FS) of 4.8%, driven by higher inflation and at-home consumption trends.
- Price Action: ACI shares are trading lower by 0.17% at $20.82 on the last check Friday.
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