Kroger playing offense with experimental formats, Morgan Stanley says
Kroger (KR) is outperforming the broader market after Morgan Stanley highlighted the "hidden value" of its new concept stores, whose focus on prepared and fresh food could be a ticket to success amid changing consumer tastes. MORGAN STANLEY BULLISH ON NEW STORES: Morgan Stanley analyst Vincent Sinisi said Tuesday that Kroger's Main & Vine, Mariano's, and Ruler Foods concept stores are underappreciated by investors and could unlock $4-$12 per share in incremental value, representing about 40% of the current stock price in Sinisi's $12, "extreme bull case." Future growth in the food retail space will "likely" come from such specialized concepts, says Sinisi, who cheers Kroger's "offensive" approach to the evolving consumer and argues that it has the customer knowledge, infrastructure, and funds to appropriately scale the new stores. The analyst keeps and Overweight rating and $40 price target on Kroger shares. PRICE ACTION: Shares of Kroger are up 3.8% to $30.16 in afternoon trading.