J.P. Morgan upgraded Nash Finch (NAFCE) to overweight from neutral.
Analyst Stephen Chick says he upgraded the food and retail store operator on the heels of favorable indications from the SEC. He says the response is preliminary, and came from the Office of the Chief Accountant, while the Division of Enforcement could still take action and the investigation is ongoing.
Nonetheless, Chick views the initial response and rehiring of auditors as a positive first step, and he will remain attentive of developments. Although the risk profile is high, investors with an appetite for risk should be compensated.
Assuming a resolution, Chick thinks a 300% upside is possible over the next 12 months, assuming no material earnings per share restatement. The company's businesses include Econofoods, Sun Mart, and Family Thrift Center.