Albertsons’ (ACI) shares fell in today’s trading as the Federal Trade Commission’s (FTC) trial to stop the grocery store’s $25 billion sale to competitor Kroger (KR) entered its fifth day. On the fourth day, the FTC seemed to gain an advantage when witnesses from C&S Wholesale Grocers, which plans to buy nearly 600 stores from Albertsons and Kroger, struggled to convince the court they would be able to effectively compete in the market after the other two merged.
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A key moment came when Keith Knopf, the CEO of Raley’s supermarket chain, seemed to challenge Albertsons and Kroger’s claims that the two compete with Costco (COST) and Trader Joe’s, as Raley’s doesn’t use them for price comparisons. Instead, Raley’s sets its prices between those of Kroger and Albertsons. Knopf also pointed out that C&S would have to rebrand the stores it plans to acquire and stated that this would come with its own set of challenges that could further impact the company’s ability to compete.
However, Albertsons warned that if the FTC blocks the merger, it might have to cut jobs, close its stores, or even sell the company. Investors can probably continue to expect relatively elevated levels of volatility from ACI as the trial is expected to continue until September 13.
Which Is the Best Supermarket Stock to Buy?
Turning to Wall Street, out of the three stocks mentioned above, analysts think that ACI stock has the most room to run. In fact, ACI’s price target of $23.33 per share implies almost 19% upside potential.
