A bevy of issues have plagued Whole Foods’ (WFMI) tanking stock:
- an economic climate averse to high-priced asparagus
- rampant food inflation
- costly Wild Oats Integration
However, Morgan Stanley has upgraded WFMI to EQUAL-WEIGHT largely because they believe these issues have been sufficiently priced in:
We still see same-store sales erosion as a risk, and the company’s levered balance sheet and negative free cash flow are valid concerns, but at current valuations, we believe the stock is already pricing in a lot of bad news. We see smoother sailing ahead in 2009 as margin problems fade and Wild Oats merger positives start to emerge.
Morgan Stanley upgrades Whole Foods (WFMI) from Underweight to EQUAL-WEIGHT.
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