Kroger rallies after Telsey turns bullish

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Telsey Advisory Group upgraded Kroger (NYSE:KR) to an Outperform ratings after having it set at Market Perform.

Analyst Joe Feldman said the firm has higher visibility and confidence into Kroger's multi-year omni-channel growth runway—supported by its strategy Leading with Fresh and Accelerating with Digital—to drive long-term total shareholder returns of 8% to 11%.

"We expect multi-year growth to be driven by: 1) focus on fresh and private brands; 2) expansion of digital and delivery, including its partnership with Instacart; 3) growth of Ocado sheds in existing and new (e.g., Florida and the Northeast) geographies; 4) selective expansion of its digital marketplace (including partnerships, like the one with Bed, Bath & Beyond); and 5) leverage of the loyalty program (including Boost, its newly launched paid membership)."

In addition, Kroger's (KR) focus on improving operations, reducing costs through greater use of technology and expanding in higher margin areas, such as alternative profit sources are anticipated to improve the grocery store operator's profitability even if there is a limit on the ability to pass on inflation costs.

Telsey assigned a higher price target of $54 to Kroger (KR).

Shares of Kroger (KR) rose 2.86% in premarket action to $48.14.

Kroger (KR) is on Seeking Alpha's Catalyst Watch this week with a business update scheduled for Friday.

Comments

[R7]

Concerned about inflation and labor costs in the next few years. Could be hard to pass cost to the consumer, then again grocery are not discretionary and house brands could do well as the consumer stretches their dollars.

[Just Some Guy]

I've been bullish on KR for a while, but it's going to be a slow roll.

[abdulmoiz1254]

2.8%
Is
Not
A
Rally

Pleaaaase

[Just Some Guy]

@abdulmoiz1254 now 3.32%! But that's just today's intraday, there's a gap too and current price is >5% above yesterday's close, 10% above a few days ago.

Still below recent highs, but now above Bollinger band so probably going a bit higher near term.

[abdulmoiz1254]

@Just Some Guy
Yeah still around the level it was a month ago where I trimmed
As I didn't feel it would cross 50
Gotta average down

Wouldn't mind it if it does though

[Just Some Guy]

@abdulmoiz1254, it's slippery, I've wanted to add for months but can't find a day when the charts look just right, LOL. I have a few shares from lower down, so I'll be averaging up.