Kroger stock was trading at $ 42.25 as of 01:46 PM EDT.
Simeon Gutman, an analyst with Morgan Stanley, said on Thursday that his position on Albertsons Companies (NYSE:ACI) has changed. In light of the potential gains from the proposed merger with Kroger, Gutman upgraded the company to Equal-weight and increased his price estimate on shares to $30 from a previous $26. (NYSE:KR). A Sell-equivalent rating is no longer warranted, according to his prediction that the stock will trade in a narrow range for the upcoming year.
The stock of a firm is typically traded mostly independently of its fundamentals when it is bought. The likelihood of a protracted antitrust review phase and the risk that the merger won’t close (our earlier research implies the stock is pricing in a probability of the deal concluding of about 50%) could cause ACI to be different, according to Gutman. Fundamentals will still be important, but less so than they would have been had a deal not been disclosed. Therefore, this means. At Kroger, he kept a rating of Sell-equivalent (NYSE:KR).
Developments behind Kroger stock
In their digital skills and online presence, Albertsons and Kroger have both made significant investments. In addition to nearly 2,100 curbside pickup and delivery locations, Albertsons has a sizable omnichannel and fulfillment infrastructure in place. Albertsons for U, its loyalty member program, has 31 million members. Its own reward program, Boost by Kroger, a for-fee service akin to Walmart+ or Amazon Prime, has already undergone a redesign thanks to Kroger’s comparable competitive advantages.
A 32.8% premium over Albertsons’ closing price on October 12—the day the transaction was announced—Kroger would acquire Albertsons for $34.10 per share. Depending on how many locations Albertsons needs to sell in order to obtain regulatory approval, the final payment amount might also be decreased. An extra cash dividend of around $6.85 per share will be given to shareholders of Albertsons. More on Motley Fool advice.
Kroger Stock Drops As Analysts Shift From Albertsons Over Deal Uncertainties
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Author Jowi Kwasu