Barclays upgrades Sprouts Farmers Market stock to Overweight on growth outlook

Investing.com - Barclays (LON:BARC) upgraded Sprouts Farmers Market (NASDAQ:SFM) stock rating from Equalweight to Overweight on Thursday, while raising its price target to $185.00 from $173.00. The stock, which has delivered an impressive 58% return over the past year, currently trades at $158.06.

The upgrade reflects Barclays’ confidence in Sprouts’ steady multi-year trends with potential for upside growth. The firm cited several incremental sales drivers supporting this outlook, including the company’s loyalty program expected to show initial results in Q4 and e-commerce operations that continue to gain momentum. According to InvestingPro data, the company’s revenue has grown 15.5% in the last twelve months, with a healthy gross margin of 38.7%.

Barclays also highlighted strong new store cohort performance and underlying strength in Sprouts’ category as additional factors supporting potential sales upside. The firm noted that the grocery chain’s gross margin remains healthy with room for continued gains.

The research firm mentioned that SG&A expenses, while still elevated, should begin to normalize, with an implied step down for Q4 suggesting a positive outlook. Barclays believes Sprouts could be tracking ahead in the current quarter-to-date, though it continues to monitor a more difficult September comparison.

Barclays concluded that Sprouts’ growth story remains solid, expressing increased confidence about earnings per share upside potential for fiscal year 2026.

In other recent news, Sprouts Farmers Market reported impressive Q2 2025 results, surpassing analysts’ expectations. The company achieved an earnings per share (EPS) of $1.35, which was higher than the projected $1.23, representing a 9.76% surprise. Revenue also exceeded forecasts, reaching $2.2 billion compared to the anticipated $2.17 billion. Additionally, Sprouts Farmers Market demonstrated strong comparable sales growth of 10% and greater-than-expected gross margin expansion, indicating continued market share gains. In response to these developments, BMO Capital adjusted its price target for Sprouts Farmers Market from $180.00 to $170.00, while maintaining a Market Perform rating. This adjustment reflects anticipated deceleration in comparable sales growth. These updates highlight recent developments for Sprouts Farmers Market.

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