Investing.com -- Ahold Delhaize (AS:AD) has been upgraded to a "buy" rating from "neutral" by Goldman Sachs, reflecting an improved outlook driven by solid sales growth in Europe and early signs of a turnaround in its U.S. business.
The brokerage raised its 12-month price target for the Dutch retailer to €40 per share, up from €39, citing stronger earnings expectations.
In the United States, where the company had struggled with market share declines in recent years, a turnaround strategy appears to be making progress.
Investments in pricing and store refurbishments have led to better customer experience metrics, with like-for-like sales growth of 2% expected in the first quarter of 2025.
While the U.S. segment had previously faced headwinds, there are indications that sales trends have stabilized, aided by normalization in consumer spending patterns.
The European market continues to perform well, supported by robust sales growth and the recent acquisition of the Romanian retailer Profi.
This deal is expected to add approximately €3 billion to Ahold Delhaize’s revenue in 2025.
Excluding tobacco and fuel, like-for-like sales growth in Europe has exceeded 4% since the second quarter of 2024, with Belgium recovering well following a transition to an affiliate model.
Goldman Sachs now projects an 8% increase in earnings per share for fiscal year 2025, reaching €2.76. Revenue for the year is expected to grow by 5.4% to €94.2 billion, with further increases anticipated in the following years.
First-quarter earnings per share are forecast at €0.64, an 8.8% rise from the previous year, supported by a 7% increase in revenue and higher operating profit.