The Zhitong Finance App learned that if the much-anticipated merger plan with Abbotson (ACI.US) is shelved, US grocery chain leader Kroger (KR.US) may carry out large-scale stock repurchase initiatives, and the potential revenue from its alternative value business is expected to reach double-digit levels in 2024, which is expected to jointly promote the rise in stock prices. Edward Kelly, an analyst from Wells Fargo (Wells Fargo), expects the situation to improve in the next few quarters, so he raised Kroger's stock rating from “hold and wait” to “increase holdings,” and raised the target price by 12% to $65, which is about 17% higher than the stock's closing price on Monday.

Analyst Kelly expects that the overall environment of the US grocery industry will improve based on anti-inflation near bottoming out in the first quarter, and that since the price of eating out is still expensive, the pressure on grocery sales will ease, and the return of supplier promotions will help traditional grocers to the greatest extent.

Wells Fargo also believes that if the Kroger and Albertsons merger is eventually shelved by US antitrust agencies, Kroger's shareholders will benefit from the company's aggressive share repurchases, which are expected to reach about $10 billion.

“Investors may be disappointed if the deal is forced to end at this time, but the potential for growth of 20% in the fourth year (according to Kroger's latest performance guidelines) should limit the downside for Kroger shares,” Kelly said in a research note on Tuesday.

Analysts are generally optimistic about the future market situation of Kroger stock. The authors of Seeking Alpha and Wall Street analysts rated the stock a “buy” rating. Seeking Alpha even rated Kroger as a “strong buy” based on quantitative ratings based on multiple quantitative metrics.

According to public information, Kroger is one of the largest grocery chains in the US, providing a wide range of products, including food, health and beauty products, pharmaceuticals, and fuel. Albertsons also operates in food and drug retail, and has a network of stores throughout the United States providing groceries, general merchandise, health and beauty care products, pharmacies, fuels, and other items. Kroger's market capitalization is close to 40 billion US dollars, which is higher than that of Alberson, which has a market capitalization of about 11.6 billion US dollars.

According to Wall Street analysts, the main reason for the merger was to enhance competitiveness in the increasingly fierce US retail market. The combined new retailer is expected to significantly save costs through economies of scale, provide more competitive prices and a wider range of product choices, enhance the customer experience through technology integration, and expand its geographic footprint in the US market, which is particularly critical in facing competition from large retailers such as Walmart and Amazon.

However, this merger plan did not go well, and Kroger and Albertsons merger plans are being reviewed by the US Federal Trade Commission (FTC) and are facing potential legal challenges. The FTC has filed lawsuits to try to prevent this merger on the grounds that the deal may remove some competitive pressure, cause essential grocery prices to rise for millions of US consumers, and could harm tens of thousands of workers. The FTC and several state attorneys general are jointly opposing the merger, arguing that it could reduce the quality of goods and services and limit consumer choices.