On Friday, Goldman Sachs analyst team upgraded Koninklijke Ahold Delhaize NV (AD:NA) (OTC: ADRNY (OTC:ADRNY)) stock from Neutral to Buy, setting a new price target of €40.00, up from the previous €39.00. The decision comes as Goldman Sachs anticipates approximately 18% upside potential for the European food retailer’s shares, placing Ahold Delhaize seventh in their risk-adjusted return rankings among the 22 companies they cover, excluding those not rated. The company’s stock has demonstrated impressive momentum, delivering a 26.5% return over the past year and currently trading near its 52-week high of $37.67. According to InvestingPro analysis, the stock appears undervalued based on its Fair Value calculations.
The Goldman Sachs analysts expressed confidence in Ahold Delhaize’s potential as a stable investment, often referred to as a "compounder," due to its consistent performance and lower share price volatility compared to other companies in their coverage. Supporting this stability thesis, InvestingPro data shows the company has maintained dividend payments for 19 consecutive years, with a current dividend yield of 3.7%. They noted that the company’s next twelve months price-to-earnings ratio is around 12 times, which aligns with its historical average since 2010. The company’s beta of 0.25 indicates significantly lower volatility than the broader market.
The upgrade reflects a broader positive stance on the European food retail sector, particularly in markets where pricing remains rational, such as the United Kingdom (TADAWUL:4280). Goldman Sachs also maintains Buy ratings on other major UK retailers including Tesco (OTC:TSCDY), Sainsbury (LON:SBRY)’s, and Marks and Spencer (LON:MKS).
Ahold Delhaize’s new price target and upgraded rating underline the firm’s belief in the company’s solid fundamentals and its ability to navigate the current volatile consumer environment effectively. The analysts underscored the retailer’s alignment with market averages and its potential for steady growth amidst industry challenges.
In other recent news, Koninklijke Ahold Delhaize NV has been the subject of various analyst evaluations and strategic updates. Citi has reinstated coverage of the company with a Neutral rating and set a price target of EUR 37.00, anticipating EPS growth from 2026 onwards. This comes after adjustments to its fourth-quarter 2024 sales growth estimates, which now predict a 1.0% increase in U.S. comparable sales and a 1.9% rise in Europe. The company’s acquisition of Profi Rom is expected to contribute €3 billion in sales, with a neutral effect on EPS in 2025 but becoming accretive from 2026.
Meanwhile, Bernstein has maintained its Market Perform rating on Ahold Delhaize, with a price target of EUR 32.00, while highlighting challenges in the U.S. market. The company is focused on revitalizing its U.S. operations, including narrowing the pricing gap with competitors and modernizing its Stop & Shop stores. Bernstein’s analysis notes the need for more confidence in Ahold Delhaize’s turnaround strategy, particularly in achieving sustained U.S. margins above 4.5%. Both firms express a cautious outlook, awaiting tangible results from the company’s strategic efforts.
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