Kroger stock has gained around 2.6% in 2021.
Kroger stock fell Tuesday after Bank of America Merrill Lynch warned the supermarket’s shares look pricey, given difficult comparisons and the potential for higher expenses.
Analyst Robert Ohmes slashed his rating on Kroger shares (ticker: KR) to Underperform from Neutral, and cut his price target to $28 from $40.
Kroger stock slid 2.8% to $32.64 in recent trading.
He has three main concerns about the stock, the first of which is how the company will fare when mass vaccination diminishes the threat of the Covid-19 virus. While Kroger and its peers did well throughout the crisis, the company now faces tough comparisons from much of 2020, when it benefited from consumers stocking their pantries. With so many people eating at home more often, grocery stores didn’t need to discount as much during the pandemic. However, Ohmes worries that when more people are inoculated, consumers will return to restaurants, and supermarkets likely will have to offer more promotions in response.
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His second worry is Kroger’s partnership with online grocer Ocado…