Sprouts Farmers Market on watch after Oppenheimer downgrade

|About: Sprouts Farmers Market, Inc. (SFM)|By:, SA News Editor

Oppenheimer lowers Sprouts Farmers Market (NASDAQ:SFM) to a Perform rating from Outperform on a lowered profit growth outlook for the grocery chain.

"We now see potentially more muted profit growth at SFM given both competitive pressures and risks related to management changes and are therefore lowering our earnings forecasts to reflect our latest thinking,' writes analyst Rupesh Parikh.

Parikh and team don't completely discount the potential for a SFM buyout down the road.

"We continue to view SFM as a takeout candidate. In this scenario, we view fair value for shares in the low to mid-$20's range. We believe other conventional players such as Albertsons and KR could potentially be interested, but potential timing is less clear given an ecommerce focus lately by most players," reads the SFM takeout summary.

The sell-side in general has a Hold rating on Sprouts, although the consensus price target of $22.85 indicates upside.

Shares of Sprouts are down 1.16% premarket to $17.09.

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