Jefferies upgrades Ahold Delhaize, shrugs off US fears

Jefferies upgrades Dutch food retailer Ahold Delhaize AD.AS to "buy" from "hold", saying that recent market fears about U.S. competition are "overplayed"

"Recent months have seen a trio of issues come to weigh on AD, in the form of US$, price competition worries, and Amazon's renewed focus on its food business. We think these fears are overplayed," the broker says

Jefferies raises its PT by over 6% to 42 euros, cites accelerating top-line growth in both the U.S. and Europe as key drivers

U.S. margin pressures have troughed as volumes recover, while dilution from the recent Profi acquisition in Romania is set to fade, the broker adds

A renewed push into online grocery by competitors could provoke industry consolidation, with a hypothetical merger with Kroger seen as accretive for shareholders

"AD's ability to deliver US sales improvements and Europe margin expansion provides peace of mind not easily found elsewhere," Jefferies adds

Out of 16 analysts that cover Ahold Delhaize, eight rate the stock "strong buy" or "buy", ​six rate it "hold" and two​ rate it "strong sell" or "sell" - LSEG data