Bank of America Upgrades Grocery Outlet (NASDAQ:GO) to "Buy"

Key Points

• Bank of America upgraded Grocery Outlet to “Buy” from “Neutral” and raised its price target to $15 from $12.50, implying approximately 37% upside from the prior close.
• Despite the upgrade, broader analyst sentiment remains cautious: Grocery Outlet has a consensus “Reduce” rating and an average price target of $10.50, based on one Buy, eleven Holds, and two Sells.
• The company beat quarterly expectations with $0.20 earnings per share versus $0.13 expected and $1.19 billion in revenue, while insiders recently increased their holdings through stock purchases.

Grocery Outlet (NASDAQ:GO - Get Free Report) was upgraded by Bank of America from a "neutral" rating to a "buy" rating in a report released on Wednesday, Benzinga reports. The brokerage presently has a $15.00 price target on the stock, up from their previous price target of $12.50. Bank of America's price target points to a potential upside of 36.99% from the stock's previous close.

A number of other research analysts also recently issued reports on the company. Deutsche Bank Aktiengesellschaft restated a "hold" rating and set a $9.00 price target on shares of Grocery Outlet in a report on Thursday, August 13th. UBS Group upped their target price on Grocery Outlet from $10.00 to $11.50 and gave the company a "neutral" rating in a report on Monday, August 17th. DA Davidson lifted their price target on shares of Grocery Outlet from $9.00 to $12.00 and gave the company a "neutral" rating in a report on Thursday, August 13th. Morgan Stanley upped their price objective on shares of Grocery Outlet from $7.00 to $11.00 and gave the stock an "equal weight" rating in a report on Thursday, August 13th. Finally, Telsey Advisory Group reaffirmed a "market perform" rating on shares of Grocery Outlet in a research report on Thursday, August 13th. One research analyst has rated the stock with a Buy rating, eleven have assigned a Hold rating and two have given a Sell rating to the company. According to data from MarketBeat.com, the company currently has a consensus rating of "Reduce" and an average target price of $10.50.

Grocery Outlet Stock Performance

NASDAQ:GO opened at $10.95 on Wednesday. The company has a debt-to-equity ratio of 0.60, a quick ratio of 0.30 and a current ratio of 1.29. Grocery Outlet has a fifty-two week low of $5.66 and a fifty-two week high of $16.99. The firm has a market cap of $1.08 billion, a PE ratio of -2.83, a price-to-earnings-growth ratio of 7.72 and a beta of 0.72. The business has a 50 day moving average price of $10.91 and a 200-day moving average price of $9.17.

Grocery Outlet (NASDAQ:GO - Get Free Report) last announced its quarterly earnings results on Wednesday, August 12th. The company reported $0.20 earnings per share for the quarter, beating the consensus estimate of $0.13 by $0.07. The business had revenue of $1.19 billion during the quarter, compared to analysts' expectations of $1.17 billion. Grocery Outlet had a negative net margin of 8.04% and a positive return on equity of 5.84%. The firm's revenue for the quarter was up 1.1% compared to the same quarter last year. During the same quarter in the prior year, the company posted $0.23 EPS. Equities research analysts predict that Grocery Outlet will post 0.42 earnings per share for the current year.

Insider Transactions at Grocery Outlet

In other Grocery Outlet news, insider Paul Miller bought 8,000 shares of Grocery Outlet stock in a transaction dated Thursday, August 20th. The shares were purchased at an average cost of $10.90 per share, with a total value of $87,200.00. Following the transaction, the insider directly owned 72,171 shares of the company's stock, valued at $786,663.90. This represents a 12.47% increase in their ownership of the stock. The acquisition was disclosed in a legal filing with the Securities & Exchange Commission, which can be accessed through this link. Also, Director Carey Jaros purchased 15,000 shares of the stock in a transaction that occurred on Thursday, August 27th. The shares were acquired at an average cost of $11.70 per share, with a total value of $175,500.00. Following the completion of the transaction, the director owned 60,000 shares in the company, valued at $702,000. This trade represents a 33.33% increase in their ownership of the stock. The disclosure for this purchase is available in the SEC filing. 5.60% of the stock is owned by corporate insiders.

Institutional Trading of Grocery Outlet

Several hedge funds and other institutional investors have recently made changes to their positions in GO. Bank of America Corp DE boosted its holdings in Grocery Outlet by 31.3% in the first quarter. Bank of America Corp DE now owns 1,083,541 shares of the company's stock worth $7,639,000 after acquiring an additional 258,292 shares in the last quarter. CenterBook Partners LP raised its position in shares of Grocery Outlet by 262.2% in the 4th quarter. CenterBook Partners LP now owns 645,159 shares of the company's stock worth $6,516,000 after purchasing an additional 467,019 shares during the last quarter. BlackRock Inc. purchased a new position in shares of Grocery Outlet in the 2nd quarter worth about $152,440,000. Clearbridge Investments LLC boosted its stake in Grocery Outlet by 6.6% in the 4th quarter. Clearbridge Investments LLC now owns 2,816,721 shares of the company's stock worth $28,449,000 after purchasing an additional 173,308 shares in the last quarter. Finally, Quantinno Capital Management LP grew its position in Grocery Outlet by 217.0% during the 1st quarter. Quantinno Capital Management LP now owns 429,869 shares of the company's stock valued at $3,031,000 after purchasing an additional 294,280 shares during the last quarter. Hedge funds and other institutional investors own 99.87% of the company's stock.

About Grocery Outlet

Grocery Outlet Holding Corp. operates a network of independently operated, extreme-value grocery stores in the United States. The company offers a rotating selection of branded and private-label products at discounted prices, including groceries, fresh produce, meat, dairy, frozen foods, beverages, snacks, household goods and health and beauty products.

Its merchandising model is based on opportunistic buying, allowing Grocery Outlet to purchase surplus inventory, packaging changes, discontinued products and other bargains from manufacturers and distributors.

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