Whole Foods Market shares remained stagnant for almost three years amid tight market competition, but the pioneer in natural and organic groceries significantly rallied 5% in today’s market.
The largest U.S. groceries seller Wal-Mart announced on Thursday it would curb growth in new-store as it invests in e-commerce, suggesting a good news for many retailers mainly from specialty discounters like Dollar Tree and Dollar General, including grocery chains like Whole Foods and Kroger.
Declining food prices have been weighing on grocery sellers, which is also led by Wal-Mart renewed price cuts, making it difficult for Whole Foods after struggling to shake its “whole paycheck” reputation.
To compete with rivals, Whole Foods had recently opened chain stores with lower prices called 365.
Further, the largest pure-play grocer Kroger was considering a bid for Whole Foods Market.
Why Would Kroger Want Whole Foods Market?
It appears that Whole Foods Market, Inc. and Twitter Inc are both into M&A tag. After WFM shares gained 5%, led by growing speculations that the pioneer grocery could have a buyer in Kroger Co, citing investors aren’t interested in Twitter after all.
Ahead of WFM’s positive market share on the takeover rumor, it appears that the recent gain still posted below its 52-week lows, where a buyer attempts to go near. In addition, analysts believe that it is easier for the grocer to show consistent lows as shares have been struggling over the past five years.
Whole Foods Market, Inc. issued its financial earnings on September 30, 2016, and is scheduled to report its next earnings on November 2, 2016.
In the company’s revenue forecasts, 8 analysts of which affirmed their consensus average revenue estimates for WFM as 1.46 billion. The analysts’ low revenue estimate stood at 1.47 billion, while the high revenue estimate settled at 1.52 billion, with a 1.31 billion sales a year ago.
Several analysts currently weigh in on the company’s stock, in which 1 analyst affirmed a Strong Buy rating, 5 issued a Buy rating, 12 set a Hold rating, 2 gave an Underperform rating and 4 have given a Sell rating.
Meanwhile, 19 analysts gave a price target of $40 high, while the average price objective is $30.63 and a low price objective of $20.
Current Stance of WFM Shares
The chart below illustrates the current stance of WFM stock’s movement amid growing speculations of the Kroger takeover bid. Meanwhile, market players were signaled to perform a Buy position on the third candle, which in fact did slightly rallied in a light trading volume.
Stock prices tried to break out on the downside nearly positioning away from the support line and continued a downward trend and consolidated in the next succeeding sessions. However, as the Kroger takeover rumor generated discussions, WFM significantly rallied and settled at 29.83 in a heavy trading volume on October 6.
As WFM shares were seen surging in today’s session, led by the Kroger speculation, we conclude that shares will continue to rally if the next session will position above the support line or tried to break out on the upside.
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