KR Stock In Focus: Wells Fargo Flags ‘Choppy’ Road Ahead As Kroger Faces Flat Q2 Earnings Growth

Wells Fargo lowered its price target on Kroger to $58 from $68 and kept an ‘Equal Weight’ rating on the stock.

• Barclays said Kroger is expected to report flat earnings growth in the second quarter.
• Kroger reaffirmed its outlook for the year and sees inflationary pressure to increase as the year progresses.
• The company also expects its adjusted net earnings per share to be flat with last year in the second quarter.

Shares of Kroger Co (KR) were on investors’ radar premarket on Monday after Wells Fargo and Barclays lowered their price targets on the company following its first-quarter earnings. The analysts believe that while the company continues to deliver sales growth, near-term pressure points include cautious consumer spending and limited earnings growth.

At the time of writing, KR stock was flat on Monday.

Wells Fargo Flags ‘Choppy’ Way Forward For KR

Wells Fargo lowered its price target on Kroger to $58 from $68 and kept an ‘Equal Weight’ rating on the stock. The firm added that Kroger could be a ‘tough’ stock to own right now and its path forward is likely to be ‘choppy,’ according to TheFly.

Barclays too slashed its price target on Kroger to $61 from $68 and kept an ‘Equal Weight’ rating on the shares. 

The firm reduced its fiscal 2026 projections for Kroger after the company reported its first-quarter (Q1) earnings and warned of flat earnings growth in the second quarter. 

Kroger: Profit Growth Remains Elusive 

During an earnings call, company management projected its second-quarter (Q2) identical sales, excluding fuel, to be roughly in line with the first quarter. Kroger also highlighted ongoing pressure in the pharmacy business, with a growing shift from branded to generic prescriptions, and weakening consumer spending. 

The company also expects its adjusted net earnings per share to be flat with last year in the second quarter.

According to Koyfin data, 13 of 24 analysts recommend a ‘hold’ rating, while 11 recommend a ‘buy’ rating for the stock.

Kroger’s First Quarter Earnings 

The supermarket major reported Q1 sales of $46.1 billion, better than analysts’ expectations of $45.5 billion, while adjusted earnings of $1.58 per share missed the consensus of earnings of $1.59 per share, according to Fiscal.ai.   

Gross margin for Q1 took a hit due to higher fuel sales, higher transportation costs, egg deflation, and planned price investments, declining to 22.7% of sales from 23% year-over-year.

Given the broader macro environment, Kroger expects inflationary pressures to increase as the year progresses.

Kroger has reaffirmed its full-year guidance. It expects identical sales excluding fuel to be in the range of 1.0% to 2.0%, including an approximately 130-basis-point unfavorable impact from the Inflation Reduction Act, and adjusted earnings per share of $5.20 to $5.40 for the year. 

What Retail Thinks Of KR

On Stocktwits, retail sentiment surrounding the stock has remained ’bullish,’ amid ‘extremely high’ message volumes in the past 24 hours. 

KR stock has declined by more than 10% so far this year.

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