Fresh Market shares rise following Goldman upgrade
The Fresh Market Inc.'s shares jumped Tuesday after a Goldman Sachs analyst upgraded the company.
THE SPARK: Analyst Stephen Grambling lifted his rating on the grocery chain to "Buy" from "Neutral," saying the company could more than triple its store base and improve profitability, helping lift shares.
He trimmed his earnings forecast for the year ending in January 2015 to factor in higher costs stemming from the health care overhaul, but still predicted that earnings per share would grow 48 percent over the next two years.
THE BIG PICTURE: The Fresh Market, based Greensboro, N.C., operates 129 grocery stores, mostly in the Southeast, mid-Atlantic region, Northeast and the Midwest. It went public in November 2010.
THE ANALYSIS: The company's shares have fallen about 23 percent since it reported its third-quarter earnings in late November. Investors have been worried about slowing revenue growth as well as the costs of operating as a public company and for entering new markets, Grambling said. But he thinks that those worries are already reflected in the shares, which trade more cheaply than those of competitors.
He increased his price target on the company's stock to $60 from $57.
SHARE ACTION: Shares increased $2.07, or 4.5 percent, to close at $48.54. Its stock is still recovering after its drop this fall and closer to the lower end of its 52-week trading range of $42.47 to $65.69.