Goldman Sachs upgraded Sprouts Farmers Market (NASDAQ:SFM) to Buy from Sell, due to its better than expected execution amid its transformation focusing on health enthusiasts.
Shares in the company up 1.61%.
The brokerage firm added it is upgrading SFM to buy mainly due to improving new store trends, easy volume compares in first half for the company.
“Promotion risk remains an investor concern, but likely pushed later in this cycle vs peers given its customer base skews higher income and its footprint overlap vs organic grocery peers is limited,” the analysts said in a note to clients.
Goldman Sachs also added it sees a wallet share opportunity to be likely skewed to the upside due to low penetration today, while loyalty program efforts likely ramp over the coming year.
On Monday, SFM also expanded its reach, saying that it is now available on Uber Eats for on-demand grocery delivery, starting in Florida.
The company had already beaten its top and bottom estimates for its Q3 results.
SA quant rates SFM at Strong Buy, while SA analysts rate it at Buy.
Goldman Sachs, separately, downgraded Grocery Outlet (NASDAQ:GO) to Sell from Buy, with PT of $24.
Shares of GO down 7.09%.
The brokerage firm added, the downgrade is due to slowing new store trends, comps/traffic risk skews to downside, and gross margin likely to moderate from elevated levels.
“Additionally, we see downside risk to valuation as interest in the company’s defensive qualities potentially fades with a solid consumer backdrop, below algorithm comps/traffic could moderate interest in the longer term unit growth opportunity, and it is currently trading above unit growth peers while earnings growth tracks on the lower end,” the analysts said.
Earlier today, GO said its long time CFO Charles Bracher will step down on March 1.
SA quant rates the company at Hold, and SA analysts also rate it at Hold.
Goldman Sachs upgrades Sprouts Farmers Market and downgrades Grocery Outlet
