On Friday, Empire Company (TSX:EMPa) (EMP/A:CN) (OTC: EMLAF) maintained its Market Perform rating with a steady stock price target of Cdn$35.00, as confirmed by BMO (TSX:BMO) Capital. The firm's stance remains unchanged despite Empire Company's recent announcements regarding its Voilà online grocery service, which aims to reduce the impact on earnings.
Empire Company's management has expressed a cautiously optimistic view of consumer behavior, but BMO Capital prefers a more reserved approach, opting to observe future developments. The analyst noted surprise at Empire's goal for stable selling, general and administrative expenses (SG&A) by the fiscal year 2025, indicating that savings from lower Voilà fees might be balanced by increased SG&A costs in other areas.
The Voilà service is part of Empire's strategy to enhance its digital and delivery capabilities, which the company believes will contribute positively to its financial performance. Still, the analyst suggests that the full effects of these initiatives on the company's earnings are yet to be seen and warrant a period of observation before any rating adjustments are made.
Empire Company's approach to managing its SG&A expenses while expanding its online services reflects a broader effort to navigate the changing retail landscape and consumer patterns. The company's commitment to achieving a flat SG&A by FY25E is an indication of its efforts to optimize operations amidst these initiatives.
The BMO Capital analyst's reiteration of the Market Perform rating indicates a neutral perspective on Empire Company's stock, suggesting that investors may also adopt a wait-and-see approach as the company continues to implement its strategies and adapt to market dynamics. The price target of Cdn$35.00 remains as a benchmark for the stock's projected value, based on the current analysis.
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