On Monday, BMO Capital Markets adjusted its price target on shares of Kroger Co . (NYSE:KR), the supermarket chain, increasing it to $58.00 from the previous $46.00, while keeping a Market Perform rating on the stock. The adjustment follows Kroger's fourth-quarter fiscal year 2024 performance, which was described as solid by the firm.
The company's guidance indicated a stable environment, and Kroger's positive developments in customer traffic, digital engagement, retail media, and store expansion were noted as factors contributing to the improved investor sentiment towards the company's shares.
BMO Capital highlighted that Kroger's outlook for the year 2024 anticipates a decrease in earnings per share (EPS) despite modest comparable store sales growth, as the company continues to recover in volume. This projection was reportedly in line with market expectations. The firm's unchanged forecast for fiscal year 2026 anticipates an EPS of $4.60, marking a mid-single-digit percentage increase year-over-year.
The firm expressed caution regarding the potential challenges Kroger could face in a lower inflationary environment. Despite these concerns, BMO Capital has raised its price target on Kroger's stock, basing the new target on a 12 to 13 times multiple of the forecasted fiscal year 2026 EPS. The revised price target reflects a more optimistic valuation of the grocery chain's shares amid the company's recent positive performance and strategic initiatives.
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