Deutsche Bank has initiated a Buy rating on The Kroger Co. (KR) with a price target of $48, reflecting confidence in the retailer’s operational efficiency and near-term profit momentum. The firm highlights Kroger’s improving margins and disciplined capital allocation as key drivers.
- Deutsche Bank assigns a Buy rating and $48 price target to KR
- Q4 2025 adjusted EPS of $1.17, up 12% YoY
- Same-store sales growth of 3.4% in Q4 2025
- EBITDA margin projected to rise to 11.5% by 2027
- KR has $1.8 billion in cash and $2.5 billion in available credit
- Forward P/E of 16.4x, below S&P 500 average
Deutsche Bank has upgraded The Kroger Co. (KR) to a Buy rating, assigning a $48 price target, signaling strong conviction in the company’s ability to outperform in the evolving grocery sector. The firm’s analysis underscores Kroger’s aggressive cost optimization and continued investment in supply chain modernization, which are expected to support margin expansion over the next two fiscal years. The bank points to Kroger’s Q4 2025 earnings report, where adjusted EPS reached $1.17, surpassing expectations by 8% and marking a 12% year-over-year improvement. Revenue for the quarter totaled $17.3 billion, with same-store sales growth of 3.4%, driven by strong performance in private-label brands and digital delivery services. These results reflect a sustained ability to deliver top-line growth amid inflationary pressures and consumer spending moderation. Deutsche Bank notes that Kroger’s recent divestiture of its retail pharmacy operations has allowed the company to reduce leverage and reinvest in core grocery operations. The firm estimates that Kroger’s adjusted EBITDA margin will expand from 10.2% in 2025 to 11.5% by 2027, supported by continued inventory and labor cost discipline. The company’s $1.8 billion cash position and $2.5 billion in available credit further strengthen its financial flexibility. The upgrade is expected to influence institutional investor positioning, with KR shares showing a 2.3% intraday gain following the announcement. Analysts suggest that the move could prompt increased allocation from value-oriented funds, particularly in the consumer staples and retail sectors. The stock’s forward P/E of 16.4x remains below the S&P 500 average, reinforcing its valuation appeal.