In a report released today, Robert Ohmes from Bank of America Securities reiterated a Buy rating on Grocery Outlet Holding (GO – Research Report), with a price target of $33.00.
Robert Ohmes has given his Buy rating due to a combination of factors that suggest a strong long-term outlook for Grocery Outlet Holding Corp. The company is notably outperforming its peers in same-store sales and traffic, which suggests that its value proposition is resonating well across different income levels. Despite potential shifts in consumer behavior as inflationary pressures ease, Ohmes believes that the trend toward value grocers like Grocery Outlet may continue due to the enduring impact of elevated grocery prices and other macroeconomic pressures, such as reduced SNAP benefits and the resumption of student loan repayments.
Furthermore, Ohmes is optimistic about Grocery Outlet’s return to a 10% annual growth rate in store count, especially as it expands beyond its core West Coast market, which could significantly boost the company’s top-line growth and brand visibility. However, he notes potential cost pressures stemming from this expansion and investments in technology and marketing. Despite lowering the price objective to reflect these challenges, Ohmes maintains a Buy recommendation, underpinned by Grocery Outlet’s unique business model and its potential for a vast, low-risk expansion, with the current valuation near historical lows offering a compelling entry point for investors.
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Grocery Outlet Holding (GO) Company Description:
Grocery Outlet Holding Corp. engages in the operation of retail stores. It offers name-brand consumables and fresh products through a network of independently operated stores. The company was founded by Jim Read in 1946 and is headquartered in Emeryville, CA.
Read More on GO:
- Grocery Outlet Names Chikkala EVP and COO
- Grocery Outlet Names Ramesh Chikkala as New COO
- Grocery Outlet Appoints Ramesh Chikkala to Newly Created EVP, Chief Operations Officer Role
- Grocery Outlet names Ramesh Chikkala to EVP COO, effective January 22
- TD Cowen retail/luxury analysts to hold an analyst/industry conference call
