Standard & Poor’s (S&P) downgraded Kroger Co.’s stock Monday from “hold” to “sell,” citing rising price competition, the Los Angeles Business Journal reports. The move follows an upgrade by Citigroup on Friday, from “neutral” to “buy,” citing higher pharmacy sales and market share gains.
S&P lowered its target price from $25 to $21, while Citi raised its from $24 to $28.
Unseasonably warm weather this winter, coupled with high food costs, should impact results in the yet-to-be-reported November-January quarter, S&P reasons. It also lowered its earnings forecast for the fiscal year that ends next January to $2.09 per share, the Journal reports.
Citi said it expects Cincinnati-based Kroger to leverage its Dunnhumby consumer research to increase its private label offerings in non-food categories and to make some fill-in acquisitions as weaker players are squeezed out of the highly competitive grocery market. It’s forecasting $2.33 in EPS over the next 12 months.
Kroger reports fourth-quarter and fiscal 2011 results on March 1.