Morgan Stanley analyst Simeon Gutman has lowered the price target for Kroger (NYSE: KR) to $67 from the previous $73 while maintaining an Equal-Weight rating on the stock. The revision signals a recalibrated valuation expectation for the grocery retailer following a recent assessment.

The decision to adjust the price target comes as part of a routine evaluation of the company's financial position and market performance. Despite the lower target, the Equal-Weight rating suggests that the stock is expected to perform in line with the broader market or sector averages.

Rating and Price Target Details

The following table outlines the changes made by Morgan Stanley:

Kroger continues to operate in a competitive retail environment, and analyst ratings serve as a key indicator for investor sentiment. The maintenance of the Equal-Weight status indicates that while the price target has been reduced, the overall outlook remains steady relative to market performance.

Kroger Co. shares fell 10.36% to $55.88 in premarket trading on Thursday after the grocery retailer reported first-quarter results that missed earnings expectations despite stronger-than-expected revenue. The decline in share price reflects investor concerns over narrowing gross margins and a maintained outlook that some may view as conservative amidst rising costs. The company's board approved an additional $2 billion share repurchase program in December 2025, with buybacks expected to be completed by the end of fiscal 2026.

Kroger reported adjusted earnings of $1.58 per share, missing the consensus estimate of $1.59, while revenue rose to $46.12 billion, topping analysts' expectations of $45.47 billion. Gross margin narrowed to 22.7% from 23.0% a year ago. The company attributed the decline to a higher mix of fuel sales, increased transportation costs, egg deflation, and planned price investments. Operating profit increased to $1.407 billion from $1.322 billion a year earlier. The company recorded a $52 million LIFO charge during the quarter, compared with a $40 million charge in the prior-year period.

Excluding fuel, identical sales increased 1.0% year over year. Sales excluding fuel and Vitacost increased 0.5% year over year. Adjusted eCommerce sales climbed 19% from a year earlier, while profit from Kroger Precision Marketing increased by more than 20% year over year. During the earnings call, management highlighted that the E-Commerce business, including media, turned profitable in the quarter, a milestone reached ahead of schedule. The company noted that cost savings from cost of goods sold were 30% ahead of plan for the quarter, helping to fund price investments.

Kroger affirmed its fiscal 2026 outlook for identical sales, excluding fuel, to increase 1% to 2%. The company expects adjusted earnings of $5.10 to $5.30 per share, compared with the Wall Street consensus estimate of $5.27. The company also maintained its forecast for FIFO operating profit of $5.0 billion to $5.2 billion, free cash flow of $2.7 billion to $2.9 billion, and capital expenditures of $3.8 billion to $4.0 billion. Management expects cost-saving initiatives to ramp up in the second half of the year to enhance profitability.

Key Financial Metrics