RBC Capital Markets just bumped up its price target for Albertsons (ACI, Financial) to $22, up from $21, while sticking to its Outperform rating. The move follows an investor meeting where Albertsons' top brass doubled down on driving growth through internal improvements instead of flashy external plays. RBC analysts came away impressed, raising their identical sales (ID sales) projection for Q3 to 1.8% and nudging the adjusted EBITDA estimate to $1.03 billion. Looking ahead, their outlook for 2025 and 2026 remains solid, with margin gains and reinvestments holding the line.
But let's not forget the elephant in the room—the messy fallout from Albertsons' failed $20 billion merger with Kroger (KR, Financial). Newly unsealed court docs paint a picture of Kroger dragging its feet on divestitures, allegedly sinking the deal with a bad case of “buyer's remorse.” Albertsons is now gunning for $6 billion in damages, saying the botched deal cost shareholders a hefty premium. Add two years of regulatory purgatory to the mix, and Albertsons' growth plans—like scaling its digital ads business—have been stuck in neutral. All this while discount giants Aldi and Lidl keep eating away at market share.
With the merger dead and buried, Albertsons is regrouping. A $2 billion share buyback program and juiced-up dividends are on deck to keep investors happy. RBC's new $22 price target, pegged at 5x Albertsons' updated 2026 EBITDA estimate of $3.99 billion, suggests the grocer is still in the game. Kroger, meanwhile, is playing its own tune with a $7.5 billion stock repurchase plan. For investors, Albertsons' renewed focus on the basics—and its potential to close the valuation gap with rivals—makes it a story worth watching.
