Grocery Outlet (GO) Stock Target Raised to $9 Post Q1

Grocery Outlet Stock Target Raised to $9 After Mixed Q1 Results

D.A. Davidson raised its price target for Grocery Outlet Holding Corp. (NASDAQ: GO) to $9.00 from $7.00 while maintaining a Neutral rating, citing early progress in the company’s turnaround efforts. The firm said Grocery Outlet’s trends appear to have bottomed, though one quarter does not yet confirm a full turnaround. Grocery Outlet recently traded at $7.63, which would imply about 18.0% upside to the $9.00 target.

Grocery Outlet reported first-quarter fiscal 2026 net sales of $1.17 billion, up 3.6% from a year earlier. Comparable store sales declined 1.0%, but the result was better than the company’s prior outlook. The decline reflected a 3.1% decrease in average transaction size, partly offset by a 2.1% increase in transactions.

The company also beat earnings expectations on an adjusted basis. Grocery Outlet reported adjusted diluted EPS of $0.05, compared with $0.13 in the prior-year quarter. Zacks’ consensus estimate was $0.02 per share, meaning the company exceeded that estimate, although adjusted profit still fell year over year.

On a GAAP basis, however, Grocery Outlet posted a large net loss of $180.3 million, or $1.83 per diluted share. The loss was primarily driven by a $158.0 million non-cash goodwill impairment charge related to a decline in market capitalization, along with $18.2 million in restructuring charges. The company said the goodwill impairment charge does not affect future operations.

As part of its Optimization Plan, Grocery Outlet is reshaping its store base and operations. During the quarter, it opened seven new stores and closed 28 stores, ending the quarter with 549 stores in 16 states. Of those closures, 27 were tied to the Optimization Plan, which calls for the closure of 36 financially underperforming stores; the company said it completed the remaining nine closures in the second quarter.

Management said it is focused on improving its opportunistic product mix, increasing promotional activity, and strengthening execution as it works to restore sustainable, profitable growth. Grocery Outlet reaffirmed its fiscal 2026 guidance, including net sales of $4.60 billion to $4.72 billion and adjusted diluted EPS of $0.45 to $0.55.