Ahead Of The Bell: Analyst Upgrades Safeway

NEW YORK (AP) — An analyst raised his rating and price target for Safeway Inc. Tuesday, citing the grocery store operator's improved pricing and traffic.

Scott Mushkin of Jefferies & Co. also upgraded Safeway to "Buy" from "Hold," writing in a client note that stabilizing economic conditions may also help the Pleasanton, Calif.-based company get back on more solid footing.

"Given the tremendous economic challenges the company endured, its higher-end store base and the Blackhawk business, Safeway, in our opinion, should see an outsized benefit if the economy improves," Mushkin wrote.

Mushkin said that the grocery store operator has cut prices, which in turn has led to increased traffic — "the best indicator that underlining business is improving."

The analyst predicted Safeway could realize 2010 earnings of $2.50 per share. On average, analysts polled by Thomson Reuters expect income of $2.32 per share.

Mushkin lifted his share price target to $26 from $20.