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BOULDER, Colo. -- Things were looking up for Wild Oats Markets here at the end of last week, after a stock analyst from RBC Capital Market gave the chain's stock an upgrade to outperform from sector perform, giving as his reason evidence that same-store sales were accelerating faster than expected, and healthy performance in the California market.
The RBC analyst, Edward Aaron, raised his 12-month stock price target to $15 from $11, his 2005 earnings estimate to 3 cents a share from breakeven, and his 2006 forecast to 30 cents a share from 15 cents. He said he believes second-quarter same-store sales growth could top forecasts of 3 percent to 4 percent. The stock closed Friday up 83 cents at $12.40.
"We believe Wild Oats' comps have returned to positive levels in [California] and could further progress toward the high single-digit levels currently being experienced in other regions," said Aaron in a research note.
Aaron also said he expects overall same-store sales to improve in line with last quarter's increase of 7 percent, while increasing emphasis on private-label programs and demand in the supplements category would help feed the chain's gross margin performance in the future.
Wild Oats Markets operates 111 natural and organic food stores in 24 states and British Columbia, with annual sales topping $1 billion. The company's banners include Wild Oats Natural Marketplace, Henry's Farmers Market, Sun Harvest and Capers Community Markets.