Wells Fargo upgrades Kroger to Overweight on building catalysts

Wells Fargo analyst Edward Kelly upgraded Kroger to Overweight from Equal Weight with a price target of $65, up from $58. The firm has turned bullish on Kroger, saying the company’s fundamentals look poised to improve and catalysts are building. Wells says the potential for a “huge” buyback is growing, the company’s value opportunity seems underappreciated, and $5-plus in 2025 earnings per share is coming into focus. These make Kroger’s risk/reward compelling, the analyst tells investors in a research note. The company’s grocery IDs have been under pressure, but improvement is coming based on a bottoming of dis-inflation in Q1 with potential for better pricing in the second half of 2024 and easing volume pressure, epically with the high cost of dining out and normalizing elasticity, contends Wells.