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Investing.com - UBS lowered its price target on Sprouts Farmers Market (NASDAQ:SFM) to $108.00 from $118.00 while maintaining a Neutral rating following the company’s third-quarter results. This comes as SFM’s stock has fallen nearly 39% over the past six months and currently trades near its 52-week low of $98.75, according to InvestingPro data.
The specialty grocery retailer reported comparable store sales growth of 5.9% for the quarter, falling short of UBS’s 7.3% estimate and the 7.4% consensus expectation. This represented a 260 basis point sequential slowdown on a two-year stack, resulting in the company’s softest reading on this metric (14.3%) since the third quarter of 2024. Despite the slowdown, SFM maintains strong profitability with a 38.9% gross profit margin for the last twelve months.
Sprouts noted that same-store sales growth significantly decelerated as it cycled against strong prior-year comparisons, with September 2025 showing approximately 4% growth compared to 10% in September 2024, and October 2025 showing roughly 1% growth versus 13% in October 2024.
The company faces a challenging outlook as it will cycle against three consecutive quarters of double-digit comparable sales growth. Despite these headwinds, Sprouts highlighted continued strength in its most differentiated, attribute-driven offerings and maintained it is preserving wallet share.
UBS cited slowing comparable sales and building margin uncertainty in the near term as factors likely to result in a lower multiple for the stock, prompting the reduction in price target.
In other recent news, Sprouts Farmers Market reported its third-quarter 2025 earnings, showcasing a mixed financial performance. The company exceeded expectations for earnings per share, achieving $1.22 compared to the anticipated $1.17, resulting in a 4.27% surprise. However, the revenue did not meet forecasts, coming in at $2.2 billion instead of the projected $2.23 billion. Additionally, BMO Capital has adjusted its price target for Sprouts Farmers Market, lowering it from $120 to $90, while maintaining a Market Perform rating. This adjustment follows a slowdown in third-quarter comparable sales and a less favorable fourth-quarter sales outlook described as "worse-than-feared" by BMO. These recent developments reflect the company’s current financial landscape and market perceptions.
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