Kroger shares recently got downgraded by Jefferies, on tepid outlook on sales.
Jefferies downgraded the supermarket chain to hold from buy, while also cutting its price target on the company to $26 from $29.
The analyst expressed reduced confidence in the prospects of Kroger’s partnership with Ocado Group PLC . In May 2018, it was announced that Kroger had invested in a 5% stake in Ocado through a $247 million stock purchase. The deal includes automated warehouses among other technologies. But Jefferies analysts view the investment as "costly" and "risky," . Jefferies said the deal "is a poor and significant long-term capital allocation misstep when compared to micro-fulfillment."
Jefferies thinks that there is little room for any significant same-store growth in fiscal 2020. Jefferies indicated that Kroger’s management has been unable to effectively articulate a sound strategy to revive its core business, and that peers like Walmart will continue to enjoy outsized market share gains.