Pre-Earnings Bull Note Boosts Grocery Stock

Wells Fargo today upgraded the equity

Deputy Editor
Feb 27, 2024 at 12:54 PM
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Kroger Co (NYSE:KR) stock is 2.6% higher this afternoon, last seen trading at $48.51 after Wells Fargo upgraded it to "equal weight" from "underweight" and hiked its price target to $50 from $42. In its note, the analyst said it expects Kroger's unit volumes in food retail to improve. This upgrade comes before the Cincinnati-based grocery chain operator is slated to report fourth-quarter financial results, due out before the open on Thursday, March 7.

A look at Kroger stock's history of post-earnings reactions during the past two years shows a mostly positive response. During its last eight reports, five of these next-day sessions were higher. The security averaged a post-earnings swing of 4.4%, regardless of direction. This time around, the options market is pricing in a higher move of 5.9%. 

In additional to Wells Fargo's note, BMO raised its price objective to $46. Coming into today, nine of 16 covering analysts rated KR a "hold" or worse, while the 12-month average price target of $50.58 is a 4.3% premium to current levels.

This penchant for bullish bets has been the norm lately. The security's 50-day call/put volume ratio of 4.54 over at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) sits higher than 100% of readings from the past year. Echoing this, Kroger stock's 10-day call/put volume ratio of 4.92 at the ISE, CBOE, and PHLX is higher than 94% of annual readings.

On the charts, KR recently pulled back from just below the $49 level, or its highest area of trading since late-August. The stock is up 11.7% over the last 12 months, and sports a more modest 6.1% year-to-date gain.

KR Chart February 272024

 

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