Craig-Hallum downgrades Grocery Outlet to Hold, lowers price target to $20

As previously reported, Craig-Hallum downgraded Grocery Outlet to Hold from Buy with a price target of $20, down from $32. The firm says that its upgrade of Grocery Outlet’s shares earlier in 2024 was predicated on comp momentum and the resolution of systems issues. However, its checks over the past two months indicate a deceleration in same-store sales since May that creates potential downside to Q2/Q3 estimates. The slowdown is notable given that a number of peers in the grocery sector have reported strong results as consumers have shifted spending to food at home, Craig-Hallum adds. Its estimates for both 2024 and 2025 are meaningfully below consensus, and while the stock has traded poorly in recent weeks, the firm sees potential for further downside if its forecast is realized.