Analyst Simeon Gutman from Morgan Stanley maintained a Hold rating on Albertsons Companies and keeping the price target at $20.00.
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Simeon Gutman has given his Hold rating due to a combination of factors that influence Albertsons Companies’ financial outlook. One key consideration is the expected acceleration in pharmacy sales, driven by competitor closures, which could lead to a potential increase in IDs ex-Fuel guidance. However, despite this positive trend, the impact on overall earnings per share (EPS) is likely limited due to the low-margin nature of pharmacy sales. Additionally, while the company may experience a gross margin miss, this is expected to be offset by a beat in SG&A margins, aided by productivity initiatives.
Furthermore, the anticipated growth in core grocery sales remains modest, and strategic price investments, along with strong e-commerce growth, continue to exert pressure on margins. Although Albertsons is expected to achieve a slight EPS beat in Q1’25, the lack of significant EPS guidance raise reflects the cautious approach towards reinvesting potential profit upsides. Overall, these mixed factors contribute to the Hold rating, suggesting a balanced view of the company’s near-term prospects.
In another report released yesterday, UBS also reiterated a Hold rating on the stock with a $22.00 price target.
Based on the recent corporate insider activity of 31 insiders, corporate insider sentiment is negative on the stock. This means that over the past quarter there has been an increase of insiders selling their shares of ACI in relation to earlier this year.