BMO Capital lowered its price target on Sprouts Farmers Market (NASDAQ:SFM) to $70 from $90 and kept a Market Perform rating. The new target aligns with the analyst low among Wall Street firms. Shares were trading at $68.57, down roughly 60% over the past year and close to a 52-week low of $64.75.
The company delivered a modest beat in its fourth-quarter results, with comparable store sales and earnings per share coming in slightly ahead of expectations. Management provided guidance for fiscal 2026 that projects comparable sales between negative 1% and positive 1%, a range that BMO said confirms the soft trends seen in higher-frequency sales data.
Executives also acknowledged that customers are struggling with affordability. The guidance assumes that the company will face only modest pressure on EBIT margins, primarily from fixed-cost deleverage. BMO noted, however, that while Sprouts has tests in progress to address affordability concerns, margin risk remains a possibility.
Despite these near-term headwinds, InvestingPro data highlighted in the report indicates that the stock appears inexpensive on some traditional valuation metrics, trading at a price-to-earnings ratio of 13.18 and a PEG ratio of 0.26.
Other analyst activity since the quarter has produced a mixed set of adjustments. Sprouts reported a 1.6% increase in comparable store sales for the fourth quarter of fiscal 2025, ahead of Evercore ISI’s 0.8% projection. The company’s EPS of $0.92 beat Evercore ISI’s $0.88 estimate and the consensus of $0.89. Following those results, Evercore ISI removed Sprouts from its Tactical Underperform List.
Still, several brokerages cut their price targets. UBS reduced its target to $75 from $108, citing concerns about growth and consumer health-related challenges. Evercore ISI lowered its target to $83 from $130 while maintaining an Outperform rating and noting potential downside risks. Jefferies trimmed its target slightly to $105 from $110 but kept a Buy rating, pointing to heightened competition from Amazon’s Whole Foods and moderating food inflation as headwinds for Sprouts’ sales expansion.
These moves portray a varied analyst stance on Sprouts’ medium-term prospects: the company recorded modest upside in quarterly sales and earnings yet faces affordability pressure among customers that could weigh on comparable-store growth and margins. BMO’s reduced target and comments reflect concern that customer affordability and the corresponding margin implications are key uncertainties for the business as it navigates the coming year.