Sprouts Farmers Market (SFM) Stock Advancing, JPMorgan Initiates Coverage

Sprouts Farmers Market (SFM) stock coverage was initiated at JPMorgan this morning as the firm believes its 'highly attractive' produce prices make it stand out among specialty grocers.
By Natalie Walters ,

NEW YORK (TheStreet) -- Shares of Sprouts Farmers Market (SFM) - Get Report are up 1.12% to $23.43 in late-morning trading, as coverage of the stock was initiated with a "neutral" rating and a $24 price target at JPMorgan earlier today. 

The coverage comes as specialty grocers gain popularity on the trend toward eating healthier, according to the analyst note. Between 1997 and 2015, sales of organic products increased to $43.3 billion from $3.6 billion and don't show signs of slowing down.

But Sprouts Farmers Market stands out among its peers due to "highly attractive" produce prices, JPMorgan said. 

"In our recent pricing survey, we found that, on average, SFM's like-for-like perishables were 8% and 26% cheaper than Kroger's (KR) and Whole Foods' (WFM), respectively," the firm wrote. "For produce alone, SFM's prices were 16% and 28% cheaper."

Additionally, Sprout Farmers Market's physical stores are advantageous over its peers, JPMorgan said. The stores are "well designed," "appealing to a broad range of customers," "highly 'shoppable'" and "well staffed." 

Sprouts Farmers Market is a Phoenix-based specialty grocer that focuses on natural and organic products. 

Separately, TheStreet Ratings objectively rated this stock according to its "risk-adjusted" total return prospect over a 12-month investment horizon. Not based on the news in any given day, the rating may differ from Jim Cramer's view or that of this articles's author. TheStreet Ratings has this to say about the recommendation:

We rate SPROUTS FARMERS MARKET as a Hold with a ratings score of C-. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its robust revenue growth, impressive record of earnings per share growth and compelling growth in net income. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself, premium valuation and poor profit margins.

You can view the full analysis from the report here: SFM

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