Albertsons Downgraded to Underperform, Target Slashed to $12
Bank of America on 14 Oct 2026 downgraded Albertsons Companies Inc. (ticker KR) from Neutral to Underperform and cut its price target from $16 to $12. The downgrade followed Albertsons’ second‑quarter report, which showed adjusted earnings per share of $0.36, beating the Street consensus of $0.33, while comparable sales slipped 0.8% and gross margin stood at 26.8%, marginally ahead of expectations. The retailer also announced that it will no longer provide a fiscal‑2026 outlook, pending a comprehensive business review slated for completion in the fourth quarter.
Analysts Robert Ohmes and Vicky Liu of BofA reduced their price objective to 7 times fiscal‑2028 earnings per share of $1.75, down from a prior range of 7‑8 times and a target of $2.15, citing concerns that the company’s earnings power and valuation could face pressure over the next 12‑18 months as it reviews its customer strategy, cost structure, operating model, banner portfolio, market assets and capital allocation priorities. They noted that recent initiatives have added operational complexity without delivering measurable improvements in customer value proposition, traffic, unit trends or market share. The analysts expect any cost‑saving measures to be reinvested into pricing and store experience, but anticipate near‑term earnings pressure from lower‑income consumers trading down, rising supplier costs and heightened competitive pressure.
BofA highlighted several potential tailwinds: a robust pharmacy business, e‑commerce growth of 11% in the quarter, and four artificial‑intelligence initiatives covering merchandising intelligence, store labor optimization, demand forecasting and digital customer experience. The bank also referenced Albertsons’ ongoing litigation with Kroger, which involves a $600 million merger termination fee and an estimated damages claim of approximately $9 billion.
Following the downgrade, Albertsons’ shares fell more than 3% in pre‑market trading.