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.