Albertsons Companies (ACI): Hold Rating Amidst Q4 Earnings and Merger Uncertainty

Edward Kelly, an analyst from Wells Fargo, maintained the Hold rating on Albertsons Companies (ACI – Research Report). The associated price target is $22.00.

Edward Kelly has given his Hold rating due to a combination of factors including Albertsons Companies’ (ACI) performance and market conditions. ACI’s Q4 earnings were as anticipated, reflecting a challenging environment for the grocery sector. The adjusted earnings per share and EBITDA were in line with consensus but showcased a year-over-year decline. Furthermore, the company’s future is clouded by uncertainty due to the pending merger trial with Kroger (KR), which introduces a level of unpredictability regarding ACI’s outlook.

The report indicates that while ACI’s pharmacy segment showed robust growth, the grocery segment experienced a decline when pharmacy gains were excluded. This suggests underlying challenges in the core grocery business. Additionally, margin pressures persisted due to the growth in lower-margin pharmacy and digital sales and continued investments in foundational areas despite the proposed merger. Given these factors and the expectation of soft fundamentals persisting into the first half of 2024, Kelly’s Hold rating suggests a cautious approach until there is more clarity on the company’s performance and the outcome of the merger proceedings.

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Albertsons Companies (ACI) Company Description:

Albertsons Companies Inc is a Delaware corporation that was incorporated on June 23, 2015. The Company is a food and drug retailer in the United States, with local presence and national scale. It operates approximately 2,205 stores across 33 states under 18 banners, including Albertsons, Safeway, Vons, Jewel-Osco, Shaw’s, Acme, Tom Thumb, Randalls, United Supermarkets, Pavilions, Star Market and Carrs. It provides its customers with a service-oriented shopping experience, including convenient and value-added services through 1,698 pharmacies and 378 adjacent fuel centers. Its stores offer grocery products, general merchandise, health and beauty care products, pharmacy, fuel and other items and services. Various agricultural commodities constitute the principal raw materials used by the company in the manufacture of its food products.