UPDATE: Credit Suisse Reiterates On The Fresh Market On Mixed Factors

In a report published Friday, Credit Suisse analyst Edward J. Kelly reiterated an Underperform rating on The Fresh Market (NASDAQ: TFM), and raised the price target from $29.00 to $34.00.

In the report, Credit Suisse noted, “TFM reported somewhat disappointing Q3 earnings, as accelerated pricing investments failed to yield a return in-line with street expectations. Q3 EPS of $0.27 missed consensus and our estimate of $0.28. Comp growth of 3.3% accelerated sequentially and exceeded consensus of+2.1%, but underlying gross profit growth disappointed. The company's decision to hold the line on inflation and continue promotions in key categories drove better traffic, but meaningfully pressured the margin.

"Cost control was solid and about as expected. While management's tone on the call was fairly positive, it's clear that TFM continues to feel the impact of competitive pressures and is still feeling its way through its strategy to drive better frequency. The company's Q4 guidance is particularly wide for a food retailer and the mid-point of the range looks out of reach, in our view. We continue to rate the stock Underperform, as we believe the risk/reward is unattractive relative to our coverage universe given its fundamental performance and recently improved valuation. We raise our TP to $34 (from $29), which represents ~8x NTM EBITDA.”

The Fresh Market closed on Thursday at $39.71.