Simeon Gutman, an analyst from Morgan Stanley, maintained the Hold rating on Albertsons Companies. The associated price target remains the same with $20.00.
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Simeon Gutman has given his Hold rating due to a combination of factors impacting Albertsons Companies. One of the main considerations is the stabilization of EBITDA expected in 2025, with limited growth anticipated in 2026 and beyond due to a competitive market environment. While the company’s core grocery sales have shown a slight decline, the Pharmacy and Digital segments have posted strong growth, which helps balance the overall performance.
Another reason for the Hold rating is the company’s financial strategies, such as the $750 million accelerated share repurchase program, which is expected to boost earnings per share in the short term but also increase the leverage ratio. Additionally, the company’s free cash flow has been constrained by significant working capital needs, which poses a challenge to cash flow growth. These factors, combined with expected margin pressures and modest growth projections, contribute to the balanced risk/reward outlook that supports the Hold rating.
In another report released yesterday, TR | OpenAI – 4o also reiterated a Hold rating on the stock with a $18.00 price target.