Kroger ( NYSE: KR ) shares continued to rise in Friday’s premarket as JP Morgan shifted to Buy from Neutral after an encouraging Q4 earnings result.
Equity analyst Ken Goldman explained that while he believes “fundamentals will weaken they won’t collapse” making some bearish sentiment unwarranted. Additionally, he told clients that the valuation is attractive, especially when factoring in the “non-zero” possibility that the grocery giant’s merger with Albertsons Companies ( ACI ) could close.
Goldman also voiced his belief that fears about potential deflation are overblown. If it does arrive, Goldman said that history points to it lasting no more than a few months.
“We believe that the valuation is compelling, the risk/reward to fundamentals is
compelling versus consensus, the company is better than it used to be in many ways, and there’s a non-zero chance that the deal for ACI goes through,” he said, summarizing his bullish thesis. “All together, we believe that the KR shares should outperform most stocks in our coverage between now and the end of the calendar year.”
Shares of Kroger ( KR ) rose 1.88% in premarket trading on Friday, extending a 5.42% gain posted on Thursday post-earnings .
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Kroger upgraded to Buy as JP Morgan eyes favorable risk/reward