Strong Financial Performance and Growth Potential Drive Buy Rating for Sprouts Farmers Market

Analyst Robert Ohmes from Bank of America Securities reiterated a Buy rating on Sprouts Farmers (SFM – Research Report) and increased the price target to $200.00 from $190.00.

Robert Ohmes has given his Buy rating due to a combination of factors that highlight Sprouts Farmers Market’s strong financial performance and growth potential. The company reported a first-quarter earnings per share (EPS) of $1.81, surpassing the market’s expectation of $1.55, with comparable store sales increasing by 11.7%, which was also above the anticipated 11.2%. This growth was driven by both increased customer traffic and larger basket sizes, with digital sales growing by 28% year-over-year, now accounting for 15% of total sales. Additionally, the company’s gross margin improved to 39.6% due to better inventory and category management, alongside the benefits of self-distribution in meat.
Looking forward, Ohmes raised the 2025 earnings estimates, reflecting a positive outlook with expectations of 13% net sales growth and 7% comparable sales growth, alongside the opening of 35 new stores. Sprouts Farmers Market is also benefiting from reduced competition and an enhanced product assortment, which includes organic, vegan, and keto options, helping to attract a more profitable customer base. The company’s strategic initiatives in marketing, private label expansion, and loyalty programs are expected to further support customer growth. Ohmes reiterates the Buy rating and increases the price objective to $200, supported by the company’s impressive sales trends, sustained higher gross margins, and potential for further earnings growth.

In another report released on April 25, Evercore ISI also maintained a Buy rating on the stock with a $180.00 price target.

Based on the recent corporate insider activity of 110 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 SFM in relation to earlier this year.