The investment firm raised the price target on the Boise, Idaho, company's shares to $26 from $22.
The stock on Tuesday closed 2.1% lower at $29.47.
"We see risk to ACI's margin outlook given significantly greater margin expansion relative to key grocery peers," analyst Kelly Bania said.
"We see risk to [gross margin percentage] in a more price-sensitive consumer environment and risk on the wage front as unionized grocers have been shielded from broader industry wage rate increases given contract negotiation cycles.
"This could suggest a wave of wage investments in 2022/2023."
Another concern: Competitors are becoming more promotional and are "having difficulty passing on inflation" as consumers become more price-conscious, the analyst said. Albertsons, Bania said, might have to join that promotion effort.
At the same time, the analyst continues "to be positive on ACI's digital strategy ... and strong management team."
Bania outlines upside and downside scenarios for Albertsons.
“We see upside to $33 based on a 2022 estimated Ebitda multiple of 7 to 7.5 times on a pension-adjusted basis. [This assumes] that ACI can expand Ebitda margins by [more than 0.2 percentage point] from our forecast of 5.8% in 2022, reaching above 6% in 2023.”
On the downside, the analyst could see the stock at $19 to $20 “under a scenario where consumer-price sensitivity is greater than expected and wage investments are above normal in coming years.
"[This could compress] Ebitda margin to 4.6% to 4.8%, which would imply [0.1 to 0.3 percentage point above] 2019 Ebitda margins of 4.5% with an [enterprise value/Ebitda multiple] of 7x.”