Barclays initiates Kroger stock coverage with Equalweight rating, $90 PT

Investing.com - Barclays (LON:BARC) initiated coverage on Kroger (NYSE:KR), the $47.2 billion consumer staples giant with annual revenues of $147 billion, with an Equalweight rating and a price target of $90.00 on Monday. According to InvestingPro analysis, the stock is currently trading near its Fair Value, with a GOOD overall financial health score.

The investment bank expressed positive sentiment about Kroger’s post-deal refocus and identified several drivers that could support improved identical store sales through 2025/26, including competitor closings, work on simplifying promotions, and price investments. The company has demonstrated strong shareholder returns, maintaining 19 consecutive years of dividend increases with a current yield of 1.96%.

Barclays noted that Kroger’s reinvestments in stores while maintaining margins, along with share buybacks, should provide additional support in fiscal years 2025 and 2026. The firm also highlighted returning to net store growth and ramping Express Scripts as opportunities for FY26.

These positive factors are balanced against growing competition from other channels and the risk of consumer trade-down through this year, along with what Barclays considers a full valuation.

Barclays set its 2025 EPS estimate at $4.74 compared to Bloomberg consensus of $4.78, and its 2026 EPS estimate at $5.27 versus consensus of $5.22, with the $90 price target representing 16x the firm’s upside case EPS of $5.62.

In other recent news, Kroger Co . announced a 9% increase in its annual dividend, raising it from $1.28 to $1.40 per share, marking the 19th consecutive year of dividend growth. This decision reflects the company’s strong operating performance and commitment to shareholder value. UBS raised its price target for Kroger to $74, citing improved execution and profitability management, though it maintained a Neutral rating due to potential risks. Morgan Stanley (NYSE:MS) also increased its price target to $76, highlighting Kroger’s accelerating growth and market share inflection, while maintaining an Equalweight rating. Telsey Advisory Group raised its target to $82, praising Kroger’s strong execution and digital capabilities, with adjusted earnings per share surpassing expectations at $1.49. Citi followed suit, raising its target to $74 after Kroger reported a comparable sales growth of 3.2%, exceeding expectations. Kroger has revised its fiscal 2025 identical sales guidance upward, maintaining its profit projections, reflecting confidence in its strategic initiatives.

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