UPDATE: Credit Suisse Reiterates On Kroger On Q3 Earnings Upside

In a report published Friday, Credit Suisse analyst Edward J. Kelly reiterated a Neutral rating on The Kroger Co. (NYSE: KR), and raised the price target from $52.00 to $60.00.

In the report, Credit Suisse noted, “Kroger continued its strong earnings trend in Q3 as solid sales trends in food retail were bolstered by significantly better than expected fuel segment results. Q3 EPS of $0.69 exceeded consensus of $0.61 and our estimate of $0.66. We believe increased fuel profits (up an estimated $0.12 year over year) drove most of the upside, but the underlying grocery business was also strong. Non-fuel ID's accelerated to 5.6%, well ahead of consensus (+4.3%) and our 4.8% estimate, with all divisions and categories comping positively. A slightly weaker than expected gross margin and higher than expected SG&A partially offset these tailwinds. Management increased its full year outlook by ~3% at the mid-point, and early Q4 sales momentum is at the high end of the 4-5% ex-fuel ID guidance range for the quarter. 2015, however, could be more difficult as the company laps the fuel tailwind and management noted that EPS growth could come in toward the lower end of the 8-11% long-term growth rate.”

Kroger closed on Thursday at $60.76.