Street calls of the week: Micron downgrade, upgrade for Kroger

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Investing.com — Here is your Pro Recap of the top takeaways from Wall Street analysts for the past week.

InvestingPro subscribers always get first dibs on market-moving rating changes.

What happened? On Monday, JPMorgan upgraded Ollie's Bargain Outlet Holdings, Inc. (NASDAQ:OLLI) to Overweight with a $105 price target.

JPMorgan projects a favorable near-term outlook for OLLI, bolstered by a robust closeout deal environment, an enhanced competitive landscape, and steadfast execution that collectively contribute to the growth of same-store sales. Looking ahead, the investment bank anticipates a significant acceleration in “organic” unit growth, expecting it to reach double digits by FY25 and beyond. This growth trajectory is based on a 10-year plan to achieve a store count of 1,300, which is the estimated point of market saturation. This expansion is predicted to drive a compound annual growth rate of approximately 13% in Earnings Per Share, rooted in low-single-digit increases in same-store sales.

Additionally, the potential for lateral consolidation offers additional opportunities for wallet-driven enhancements to same-store sales and unit growth, which are not currently factored into JPMorgan’s model.

The investment bank maintains that there are no structural barriers to returning to the pre-pandemic unit growth rates of 13-14% over multiple years. This optimistic assessment is reflected in JPMorgan’s rating of OLLI as Overweight, indicating confidence in the company’s potential for sustained growth and profitability in the coming years. The bank’s analysis suggests that OLLI is well-positioned to capitalize on both organic expansion and strategic consolidation to bolster its market presence and financial performance.

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