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Investing.com - UBS has lowered its price target on Albertsons Companies Inc. (NYSE:ACI) to $25.00 from $27.00 while maintaining a Buy rating on the stock. The grocery retailer, currently trading at $19.26 with a market cap of $10.78 billion, maintains attractive valuation metrics with a P/E ratio of 10x, according to InvestingPro data.
The firm noted that Albertsons showed progress with its turnaround in the second quarter, with the announcement of a $750 million accelerated share repurchase (ASR) program helping to support the company’s share price gains. This aligns with an InvestingPro observation that management has been aggressively buying back shares.
UBS believes Albertsons is establishing a foundation to reach its longer-term algorithm in fiscal year 2026 and beyond, continuing to make surgical price investments in select categories and markets while expecting benefits from its centralized buying initiative to accelerate in fiscal years 2026 and 2027.
The price target reduction reflects recent industry pressures, including heightened price competition and some consumer trade down, with UBS adjusting its valuation multiple to approximately 11x from about 12x previously.
UBS also cited an uneven consumer environment and added uncertainty from the government shutdown as factors influencing its valuation adjustment for the grocery retailer.
In other recent news, Albertsons Companies reported better-than-expected financial results for the second quarter of fiscal year 2025. The company achieved an adjusted earnings per share of $0.44, exceeding analyst forecasts of $0.40. Revenue also surpassed expectations, reaching $18.92 billion compared to the anticipated $18.88 billion. Albertsons reported a 2.2% increase in adjusted identical store sales excluding fuel, slightly above Street estimates of 2.1%, despite facing a minor impact from a labor strike in Colorado. In related developments, BofA Securities adjusted its price target for Albertsons to $22.00 from $24.00, while maintaining a Neutral rating on the stock. The revision was attributed to the impact on the company’s pharmacy segment. These recent developments highlight the company’s strong performance amidst challenging circumstances.
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