Kroger Price Target Shift
Morgan Stanley Lowers Kroger Price Target to $67 Amid Valuation Concerns; Street Consensus Higher
Key Points
GuruFocus calculated Kroger’s GF Value™ at $66.72 and said the stock was trading about 15.2% below that figure, describing it as a potential “margin of safety” opportunity despite the higher trailing P/E.
In its latest quarter (reported June 18), Kroger posted EPS of $1.58, missing the $1.59 consensus by $0.01, but reported revenue of $46.12 billion vs. $45.59 billion expected; the article also cited a 44.33% return on equity and a 0.71% net margin.
Morgan Stanley’s lowered $67 price target was described as implying potential upside of 18.44% from Kroger’s then-current share price, even while keeping an “equal weight” stance.
Other recent analyst actions were detailed: BMO reaffirmed “market perform” with a $70 target; Telsey raised its target from $80 to $82 and kept an “outperform”; Citigroup increased its target from $68 to $71 with a “neutral”; UBS restated “neutral”; and JPMorgan cut its target from $72 to $70 with a “neutral.” The same reporting cited 10 “Buy” and 8 “Hold” ratings and an average consensus target of $74.31.
Morgan Stanley analyst Simeon Gutman cut his price target on Kroger from $73 to $67 on June 22, 2026, while keeping an "equal weight" rating on the stock, according to GuruFocus. The move comes just days after Kroger reported Q1 earnings that narrowly missed estimates, and it reflects growing concern that the grocery giant's stock price has gotten ahead of its actual earnings power.
Even at the lower target, Morgan Stanley's $67 figure implies an 18.44% upside from Kroger's recent share price, Watchlist News noted. But the cut is a clear signal that Wall Street is watching the company's shrinking margins closely after a turbulent two years that included a failed $24.6 billion merger attempt.
Kroger's Q1 Beat on Revenue but Missed on Profit
Kroger reported Q1 2026 results on June 18. Revenue came in at $46.12 billion, topping the $45.59 billion estimate. But adjusted earnings per share landed at $1.58, one cent short of the $1.59 consensus, according to Associated Press. Shares fell 1.4% in premarket trading despite the revenue beat.
The mixed results tell a clear story. Kroger is growing its top line, with e-commerce sales up 19% and total revenue rising 2.2%. But the price cuts it launched to win back shoppers are eating into profits. Gross margin slipped to 22.7% from 23.0% a year earlier, StreetInsider reported. Identical store sales, excluding fuel, grew just 1.0%, down from 3.2% in Q1 2025.
Morgan Stanley Sees a P/E Ratio Too High to Ignore
The core of Morgan Stanley's concern is valuation. Kroger's trailing price-to-earnings ratio sits between 33x and 40x, according to GuruFocus. Its 5-year median P/E is just 18x. In plain terms, investors are paying a historically high price for each dollar Kroger earns. Gutman argues the stock's current price assumes more growth than the margin numbers support.
Not everyone agrees it's overpriced. GuruFocus calculated its own "GF Value" for Kroger at $66.72 and noted the stock was trading roughly 15.2% below that figure, suggesting a potential "margin of safety" for value-focused investors. The firm also pointed to Kroger's 44.33% return on equity as a sign of underlying strength, GuruFocus added.
Wall Street Is Split: Targets Range from $61 to $82
Analyst opinions on Kroger span a wide range right now. Barclays is the most bearish, with analyst Seth Sigman cutting his target to $61. JPMorgan dropped its target from $72 to $70 with a "neutral" rating on June 11, MarketBeat reported. BMO kept a "market perform" with a $70 target, and Citigroup raised its target from $68 to $71 while staying "neutral."
On the bullish side, Telsey Advisory Group kept an "outperform" rating and raised its target from $80 to $82, focusing on Kroger's e-commerce progress. Goldman Sachs reiterated a "buy" with an $82 target on June 19. Overall, the Street holds 10 "buy" and 8 "hold" ratings, with an average price target of $74.31, according to Watchlist News.
Failed Merger and a New CEO Set the Stage for Recovery
The backdrop to all of this is the collapse of Kroger's $24.6 billion bid to acquire Albertsons. A federal judge blocked the deal in December 2024 on antitrust grounds, forcing Kroger into a standalone strategy. Albertsons is now reportedly seeking a $600 million termination fee, adding a legal overhang to an already complicated picture, according to GuruFocus.
Kroger brought in Greg Foran, a former Walmart executive, as CEO in early 2026. He is the company's first outside hire for the top job in decades. On the Q1 earnings call, Foran reaffirmed full-year guidance and said the company's focus is clear: "to become America's best grocer," per PR Newswire. Whether margin pressure eases enough to justify the stock's current valuation remains the central question heading into the second half of 2026.
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