• Wells Fargo has adjusted its rating for Kroger (NYSE:KR) to "Overweight" and lowered its price target from $78 to $70.
• Kroger's Q3 results showed a decline in stock price despite an EPS beat, with revenue meeting expectations but full-year EPS guidance slightly below analyst expectations.
• Despite challenges such as macroeconomic uncertainties and cautious consumer spending, Kroger's gross margin improved, thanks to reduced shrinkage and a robust private-label mix.

On December 4, 2025, Wells Fargo adjusted its rating for Kroger (NYSE:KR) to "Overweight," maintaining its previous grade. At the time of this update, the stock was priced at $63.14. Additionally, Wells Fargo revised Kroger's price target, lowering it from $78 to $70. This adjustment comes amid a backdrop of mixed financial performance and strategic challenges for Kroger.

Kroger's Q3 results showed a decline in stock price, despite continuing its trend of earnings per share (EPS) beats. The margin of these beats was narrower compared to previous quarters. Revenue met expectations, increasing by 0.7% year-over-year to $33.86 billion. However, the company's adjusted full-year EPS guidance of $4.75-4.80 fell slightly below analyst expectations, contributing to the stock's decline.

Identical sales, excluding fuel, rose by 2.6%, marking a slowdown from Q2. This was attributed to macroeconomic uncertainties, reduced SNAP benefits, and cautious spending by middle and lower-income households. Consumers preferred smaller, more frequent shopping trips and cut back on discretionary spending. Despite these challenges, the food, private-label, and ready-to-eat categories remained strong, indicating a consumer focus on value and essentials.

Kroger's gross margin improved by 40 basis points to 22.8%, thanks to reduced shrinkage, improved supply chain costs, and a robust private-label mix. However, the company's management is actively repurchasing shares, raising concerns as leverage is increasing and interest costs have doubled. Investors are questioning whether this approach is merely financial engineering or indicative of a more profound structural growth issue.

Kroger's stock price reflects a decrease of 4.62% or $3.06, with a current price of $63.14. The stock has fluctuated between a low of $60.96 and a high of $64.25 today. Over the past year, the stock has reached a high of $74.90 and a low of $57.69. Kroger's market capitalization stands at approximately $41.84 billion, with a trading volume of 21.43 million shares.