What Happened:
Shares of grocery store chain Sprouts Farmers Market (NASDAQ:SFM) jumped 5.4% in the morning session after Evercore analyst Michael Morris upgraded the stock's rating from Inline (Hold) to Outperform (Buy) and raised the price target from $96 to $120. The new price target implied a potential 15% upside from where shares traded before the upgrade was announced. After the initial pop the shares cooled down to $106.91, up 4.7% from previous close.
Is now the time to buy Sprouts? Access our full analysis report here, it’s free.
What is the market telling us:
Sprouts’s shares are not very volatile than the market average and over the last year have had only 3 moves greater than 5%. In context of that, today’s move is indicating the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was about 2 months ago, when the stock gained 20.1% on the news that the company reported second-quarter earnings results. SFM provided an optimistic full-year earnings forecast, which blew past analysts' expectations. Its revenue and EPS also outperformed Wall Street's estimates during the quarter.
Zooming out, we think this was a great quarter that shareholders will appreciate. Following the results, Wall Street analysts raised the stock's rating.
BMO analyst Kelly Bania upgraded the stock from Underperform to Market Perform and raised the price target from $40 to $102. The analyst added "Even if the competitive risks start to have an impact, [comparable store sales] have accelerated to a point that the company may still be able to absorb these impacts, and may still reach same-store sales targets."
Sprouts is up 118% since the beginning of the year, and at $106.91 per share, has set a new 52-week high. Investors who bought $1,000 worth of Sprouts’s shares 5 years ago would now be looking at an investment worth $5,312.
Here at StockStory, we certainly understand the potential of thematic investing. Diverse winners from Microsoft (MSFT) to Alphabet (GOOG), Coca-Cola (KO) to Monster Beverage (MNST) could all have been identified as promising growth stories with a megatrend driving the growth. So, in that spirit, we’ve identified a relatively under-the-radar profitable growth stock benefitting from the rise of AI, available to you FREE via this link.