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Investing.com - DA Davidson lowered its price target on Grocery Outlet Holding (NASDAQ:GO) to $16.00 from $17.00 on Wednesday, while maintaining a Neutral rating on the stock. The company’s shares, currently trading at $13.02, have declined nearly 30% over the past year, according to InvestingPro data.
The adjustment follows Grocery Outlet’s second-quarter 2025 performance, which exceeded expectations on most metrics and showed progress on various initiatives, including promising results from several test programs and benefits from improved systems and merchandising. InvestingPro data shows the company achieved 10.4% revenue growth in the last twelve months, though it trades at a relatively high P/E ratio of 75x.
Despite these positive developments, DA Davidson noted that Grocery Outlet’s third-quarter 2025 guidance fell below consensus estimates on multiple metrics, including comparable store sales, even as the company reiterated its full-year outlook.
The research firm’s revised price target is based on a 15x multiple of its 2026 earnings per share forecast for the discount grocery retailer, reflecting a more cautious valuation approach.
DA Davidson expressed concern about the company’s "back-end loaded guidance," which implies stronger fourth-quarter performance but potentially adds risk to the full-year outlook, while acknowledging early signs of improvement in the business.
In other recent news, Grocery Outlet Holding Corp reported its second-quarter 2025 earnings, exceeding analysts’ expectations with an adjusted earnings per share (EPS) of $0.23, compared to the forecast of $0.17. Despite this positive earnings result, the company’s revenue slightly missed projections, totaling $1.18 billion against the anticipated $1.19 billion. In another development, Morgan Stanley (NYSE:MS) upgraded Grocery Outlet’s stock from Underweight to Equalweight, adjusting its price target from $13.00 to $16.00. The upgrade reflects Morgan Stanley’s view of a more balanced risk/reward profile for the company, attributed to operational improvements and a more stable EBITDA trajectory. These recent developments highlight the mixed financial performance and evolving market sentiment surrounding Grocery Outlet.
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