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Specialty Food Retailers Rise On Heels Of Fresh Market Q2 Results

John Seward

Fresh Market (NASDAQ: TFM) gained more than eight percent Friday after the company said second-quarter sales grew 19 percent.

Other stocks in the specialty foods space followed suit with Fairway Group (NASDAQ: FWM) up 5.5 percent, Sprouts Farmers Market (NASDAQ: SFM) up three percent and Whole Foods Market (NASDAQ: WFM) gaining two percent in afternoon trading.

Despite its stellar sales growth, Fresh market posted a 27 percent drop in profits on higher costs Thursday after the bell, with comparable-store sales rising 2.9 percent.

But Fresh Market's current share valuation prompted B&T Corp.'s Andy Wolf to upgrade Fresh Market to Buy from Hold Friday with a $41 target.

UBS' Jason DeRise reiterated a Buy rating on Fresh Market and $44 target, citing easier profit comparisons for the third quarter as well as improved financial controls at the company.

Yet Fresh Market's recent higher costs that caused its steep earnings decline, plus expectations of low single-digit same-store sales growth worried Goldman Sachs' Stephen Grambling enough to reiterate his Sell rating.

Fresh Market traded recently at $33, up 8.4 percent.

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