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Safeway (NYSE:SWY) was downgraded by Zacks from a “neutral” rating to an “underperform” rating in a research report issued to clients and investors on Tuesday. They currently have a $31.00 price target on the stock. Zacks‘s price objective suggests a potential downside of 8.61% from the stock’s previous close.

Zacks’ analyst wrote, “Amid a challenging macroeconomic environment coupled with dwindling customer confidence, Safeway is progressing successfully to merge with Albertsons for a deal value of $9.0 billion. Accordingly, the company distributed the remaining 37.8 million shares of Blackhawk Network to its shareholders and is currently looking for monetization of its 49% stake in Casa Ley. We believe the combined company will pose major challenges to its rivals, although uncertainty related to potential antitrust challenges from the FTC persists. Safeway reported an unimpressive first quarter 2014 with adjusted EPS lagging the Zacks Consensus Estimate and revenues remaining in line with the same. Margins continue to disappoint. Likewise, increasing competitive pricing pressures from large peers are other downsides. With the merger expected to complete successfully in the near future, the upside potential of the stock is limited. Accordingly we downgrade the stock to Underperform.”

Safeway (NYSE:SWY) traded up 0.06% during mid-day trading on Tuesday, hitting $33.94. 857,924 shares of the company’s stock traded hands. Safeway has a 52-week low of $20.0179 and a 52-week high of $36.034. The stock has a 50-day moving average of $34.23 and a 200-day moving average of $32.11. The company has a market cap of $7.742 billion and a P/E ratio of 2.49. Safeway also saw a significant drop in short interest during the month of May. As of May 30th, there was short interest totalling 9,859,482 shares, a drop of 27.9% from the May 15th total of 13,676,856 shares. Approximately 4.3% of the shares of the company are short sold. Based on an average daily trading volume, of 1,536,727 shares, the days-to-cover ratio is presently 6.4 days.

Safeway (NYSE:SWY) last announced its earnings results on Wednesday, April 23rd. The company reported $0.06 EPS for the quarter, missing the Thomson Reuters consensus estimate of $0.18 by $0.12. The company had revenue of $8.26 billion for the quarter, compared to the consensus estimate of $8.26 billion. During the same quarter in the prior year, the company posted $0.35 earnings per share. The company’s quarterly revenue was up 1.0% on a year-over-year basis. Analysts expect that Safeway will post $1.11 EPS for the current fiscal year.

The company also recently announced a quarterly dividend, which is scheduled for Thursday, July 10th. Investors of record on Thursday, June 19th will be paid a dividend of $0.23 per share. This represents a $0.92 annualized dividend and a dividend yield of 2.71%. The ex-dividend date is Tuesday, June 17th. This is an increase from Safeway’s previous quarterly dividend of $0.18.

A number of other analysts have also recently weighed in on SWY. Analysts at JPMorgan Chase & Co. cut their price target on shares of Safeway from $40.00 to $36.00 in a research note on Thursday, April 24th. Separately, analysts at Cantor Fitzgerald reiterated a “hold” rating on shares of Safeway in a research note on Tuesday, April 22nd. They now have a $34.00 price target on the stock. Finally, analysts at Deutsche Bank reiterated a “hold” rating on shares of Safeway in a research note on Thursday, April 17th. They now have a $36.00 price target on the stock, down previously from $40.00. One investment analyst has rated the stock with a sell rating, eleven have issued a hold rating and three have assigned a buy rating to the company’s stock. Safeway has an average rating of “Hold” and a consensus target price of $35.50.

Safeway Inc (NYSE:SWY) is a food and drug retailer in North America.

To view Zacks’ full report, visit Zacks’ official website.

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