The firm also lowered its price target to $6 from $8 on the grocery wholesaler and retailer.
"With shaky fundamentals at all three segments, and ongoing uncertainty around how to model the transition services agreements (leading to more EPS volatility), we believe SVU's risk profile and lack of visibility on the top line have increased significantly," Deutsche Bank said in an analysts note on Thursday morning.
Before the market open on Wednesday, Supervalu reported earnings of 16 cents per share, in line with estimates, on revenue of $4.11 billion, just below estimates of $4.16 billion, for the quarter ended December 5.
Identical store sales were down 3.4%, missing estimates of a 3% decline because of deflation and negative traffic, analysts added.
"We would need to see the top-line regain some momentum before becoming more constructive on SVU," analysts noted.
Supervalu stock plunged 15.47% to close at $5.08 on Wednesday.
Recently, 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 SUPERVALU INC 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 revenue growth and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself and poor profit margins.
You can view the full analysis from the report here: SVU