Albertsons stock maintains Outperform rating at RBC on steady sales outlook

Investing.com - RBC Capital has reiterated an Outperform rating on Albertsons Companies Inc. (NYSE:ACI) with a price target of $23.00 ahead of the company’s first-quarter results. The grocery chain, currently valued at $12.29 billion, maintains a "GOOD" Financial Health Score according to InvestingPro analysis.

The investment firm expects Albertsons to report identical store sales growth of 2.2%, slightly above the consensus estimate of 2.1%, based on its state-weighted scanner analysis and Kroger (NYSE:KR)’s recent performance.

RBC projects adjusted EBITDA to decline 7% year-over-year to $1.10 billion, marginally higher than the consensus estimate of $1.09 billion, noting that top-line sales have remained steady.

The firm anticipates margin pressure from pharmacy mix, continued e-commerce growth, and reinvestment, but believes these factors are already reflected in investor expectations.

RBC’s $23 price target is based on approximately 5.2 times its calendar year 2026 adjusted EBITDA estimate of $4.07 billion, which stands above the consensus estimate of $3.91 billion.

In other recent news, Albertsons Companies reported fourth-quarter financial results that exceeded market expectations, with same-store sales growth of 2.3%, an EBITDA of $855 million, and earnings per share of 46 cents. These results surpassed analyst predictions, which estimated 1.8% for same-store sales, $834 million for EBITDA, and 40 cents for earnings per share. Despite these strong results, Evercore ISI reduced Albertsons’ stock price target to $22, highlighting the company’s anticipated investments in fiscal year 2025, which are expected to result in a 6% decline in EBITDA. UBS also adjusted Albertsons’ price target to $22, maintaining a Neutral rating due to additional investment needs in fiscal year 2025 that deviate from the company’s long-term growth algorithm.

In another development, BMO Capital Markets upgraded Albertsons’ stock rating from Market Perform to Outperform, raising the price target to $25. This upgrade reflects a positive outlook on Albertsons’ potential for valuation growth, with stable profit margins and decreased likelihood of aggressive pricing strategies. Additionally, Tigress Financial Partners increased Albertsons’ price target to $28, maintaining a Buy rating, citing the company’s effective use of digital media and expansion of its loyalty program as key growth drivers. Albertsons’ focus on its Own Brands and strategic investments in digital capabilities are seen as strengths by analysts.

Moreover, Albertsons launched Chef’s Counter, a new line of pre-seasoned and marinated meats, available in its stores. The initiative, which includes partnerships with celebrity chef Antonia Lofaso, aims to offer convenient, restaurant-quality meal options to customers. This launch is part of Albertsons’ strategy to innovate within its Own Brands portfolio.

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