Anthony Bonadio, an analyst from Wells Fargo, maintained the Buy rating on Grocery Outlet Holding (GO – Research Report). The associated price target was lowered to $18.00.
Anthony Bonadio has given his Buy rating due to a combination of factors that suggest potential value in Grocery Outlet Holding’s stock despite recent challenges. The company’s mixed fourth-quarter results showed some positive signs, such as a 2.9% comparable store sales growth that exceeded expectations, driven by strong customer traffic. However, the earnings per share and gross margin fell short of consensus estimates, partly due to specific headwinds like egg-related issues and system-related shrinkage.
Despite these setbacks, Bonadio sees potential in the company’s long-term recovery, particularly given its current low valuation. The stock is trading at a multiple that suggests it is undervalued, especially if the company can achieve its revised EBITDA guidance for 2025. Although the preliminary guidance for 2025 was conservative, with reduced unit growth and margin expectations, Bonadio believes this sets a realistic baseline for new management to build upon. The company’s differentiated grocery format and historical support for its margin targets contribute to the positive outlook, making it a compelling investment opportunity.
Based on the recent corporate insider activity of 65 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 GO in relation to earlier this year.