In a report released today, Oliver Chen from TD Cowen maintained a Hold rating on Grocery Outlet Holding (GO – Research Report), with a price target of $18.00.
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Oliver Chen’s rating is based on a combination of factors that reflect both the positive developments and the challenges facing Grocery Outlet Holding. The company’s first-quarter results exceeded expectations, with adjusted EPS outperforming market predictions due to improved gross margins. However, despite positive traffic trends, there are concerns about the decline in units per transaction, which indicates that while customers are visiting more frequently, they are not purchasing as much per visit.
Additionally, the company is in the process of addressing significant issues related to its recent technology system transition, which has affected inventory visibility and operational capabilities. While the new CEO and CFO are taking steps to realign strategic priorities and improve technology systems, the full impact of these changes remains to be seen. The stock’s current valuation is in line with historical averages, and the Hold rating reflects the need for clearer evidence of a strategic turnaround and consistent top-line growth before a more favorable rating can be considered.
Chen covers the Consumer Cyclical sector, focusing on stocks such as Ermenegildo Zegna, Kohl’s, and Costco. According to TipRanks, Chen has an average return of 4.7% and a 50.79% success rate on recommended stocks.
In another report released today, Craig-Hallum also reiterated a Hold rating on the stock with a $14.00 price target.