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On Friday, Jefferies reiterated its positive stance on Kroger Co (NYSE:KR) shares, maintaining a Buy rating and a $75.00 price target. The firm’s assessment followed Kroger’s strong fourth-quarter performance, which exceeded expectations in both sales and profit. According to InvestingPro data, Kroger, with its substantial $43.88B market cap and $147.12B in revenue, is currently trading near its Fair Value. The company’s management provided guidance for fiscal year 2025, anticipating same-store sales growth of 2-3%, including an expected inflation increase.
Kroger’s management detailed that the inflation rate is projected to be between 1.5% and 2.5%. This forecast suggests that volume sales could remain steady or experience a slight uptick. Jefferies views this as an indication of market stability. The fourth quarter saw Kroger benefit from an increase in both customer traffic and household growth, which are particularly encouraging signs as the company has faced challenges from channel shifts over the past two years. InvestingPro analysis reveals the company’s strong financial health score of 2.83 (rated as GOOD), with two key ProTips highlighting its 19-year dividend growth streak and aggressive share buyback program. Additional ProTips are available with an InvestingPro subscription.
The analyst from Jefferies highlighted the positive contributions to Kroger’s fourth-quarter performance, emphasizing the combination of traffic and household growth as supportive factors for the company’s outlook. Despite facing headwinds from shifts in consumer shopping channels, Kroger has managed to deliver solid results.
Kroger’s guidance for the coming fiscal year reflects a cautiously optimistic outlook in the face of inflationary pressures. The company’s ability to maintain volume sales amidst inflation is seen as a positive sign by Jefferies, reinforcing the rationale behind the firm’s Buy rating.
The reiterated Buy rating and price target by Jefferies underscore the firm’s confidence in Kroger’s strategy and performance. As the grocery retailer navigates the challenges of a dynamic market, it continues to attract attention from analysts for its resilience and potential for sustained growth.
In other recent news, Kroger reported its first-quarter 2025 earnings, revealing an earnings per share (EPS) of $1.14, which surpassed analysts’ expectations of $1.11. However, the company’s revenue fell short, coming in at $34.3 billion compared to the anticipated $34.75 billion. Despite the revenue miss, Kroger’s strategic initiatives and digital sales growth have bolstered investor confidence. Evercore ISI adjusted its outlook on Kroger, reducing the price target to $73 while maintaining an Outperform rating, citing potential growth in the company’s core operations. Meanwhile, Guggenheim reaffirmed its Buy rating with a $71 price target, highlighting Kroger’s strategic initiatives and potential for improved profitability. Kroger’s guidance for 2025 includes a comparable store sales growth of 2-3% and an EBIT forecast between $4.7 and $4.9 billion. Analysts from Guggenheim and Evercore ISI noted the company’s efforts to reduce losses in digital channels and improve core operations, indicating a favorable outlook for future growth. These developments underscore Kroger’s ongoing efforts to enhance its business model and financial performance.
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