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UBS is going all in when it comes to Albertsons . The bank upgraded shares of the grocery store chain to a buy rating from neutral. Analyst Mark Carden raised his 12-month price target to $27 per share from $22, implying upside ahead of 35%. UBS’ rating change comes after a 7% drop this month. ACI mountain 2025-07-01 ACI in July “ACI’s recent pullback doesn’t fully reflect 1) its top line opportunity from pharmacy cross-shopping & digital, 2) its profitability opportunities from centralizing buying & retail media, & 3) its footprint-driven competitive advantages,” Carden wrote. “It’s already lowered expectations for FY’25, as it invests in value & looks to accelerate grocery unit volume growth. As it grows off this achievable base, we expect for it to repurchase shares & consistently issue beats & raises. This should help its multiple rerate, narrow the gap with KR, & justify our Buy rating.” The analyst pointed out that Albertsons has seen 15 straight quarters of double digit growth in the pharmacy vertical. This is because customers shopping in the pharmacy business tend to visit four times as frequently as non-pharmacy customers. Albertsons’ heavy investments in this vertical should begin to pay off in the long term, especially as competitors begin closing more brick-and-mortar stores. UBS added that Albertsons tends to operate in markets that are more densely populated and have higher-income earnings than its U.S. peers. Eventually, Carden sees a path forward for Albertsons to increase its total market share. “We also believe that ACI’s investments in private label give it a clear path to ~30% penetration, up from ~25-26% today. We estimate every ~100 bp penetration boost would translate to ~10 bps of gross margin support, helping to support the co’s profitability profile,” he wrote. Albertsons shares ticked higher in the premarket following the upgrade.
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