GO - Grocery Outlet falls after D.A. Davidson pulls bull rating due to valuation

D.A. Davidson cut its rating on Grocery Outlet Holding Corp. ( GO ) to Neutral from Buy.

The firm pointed to valuation concerns after GO shares moved past the prior price target.

Analyst Michael Baker: "In fact, we are increasing our estimates for 2Q22 and the year as we believe GO is well positioned within the current economic backdrop, including benefiting from consumer’s increased focus on value and grocery stores’ ability to pass through at least some inflation."

Baker and team still have estimates on GO ahead of the consensus marks for the quarter and full year, although transportation cost pressures is seen limiting EPS upside.

D.A. Davidson's new 12-month price target is $43, which is based on 35X the new 2023 EPS estimate and stands as the one of the highest forward PEs in the sector.

The Seeking Alpha Quant Rating on GO fell to Hold from Strong Buy on June 9 with a low mark for valuation holding back the rating.

Shares of GO fell 2.83% premarket to $41.88 vs. the 52-week trading range of $21.01 to $44.04.

For further details see: