Why Sprouts Farmers Market (SFM) Is Advancing Today

Sprouts Farmers Market (SFM) is climbing 3% after Swiss bank UBS raised its price target on the shares to $195 from $132. The bank kept a Neutral rating on the shares.

SFM owns and operates upper-scale supermarkets. It is slated to report its fourth-quarter results tomorrow after the market closes.

Why UBS Increased Its Price Target on SFM

Sprouts’ same-store sales are expected to have risen last quarter at the fastest rate since 2014. With Sprouts expected to continue benefiting from its emphasis on healthy and organic food, UBS raised its 2025 earnings per share estimate for the firm to $4.44 from $4.25. The bank also increased its 2026 EPS estimate to $4.95 from $4.82.

A bright, colorful display of fresh produce in a grocery store.

Additionally, UBS increased the price-to-earnings multiple that it used to obtain its price target for Sprouts. Specifically, the bank is now using a P/E ratio of 39 times its 2026 EPS estimate for the firm to obtain its price target, versus its previous P/E multiple of 27 times. The increase reflects UBS’ increased bullishness on the company’s outlook.

More Information About Sprouts Farmers Market

Analysts on average expect Sprouts’ EPS to climb to $4.27 this year from $3.70 in 2024. The mean estimate also calls for the company’s revenue to rise 10.7% to $8.5 billion this year.

The shares are changing hands at a forward P/E ratio of 41.3 times.

In the last month, the shares have risen 21% while they have advanced 24% in the last three months and 39% so far in 2025.

While we acknowledge the potential of SFM, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than SFM but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

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Disclosure: None. This article is originally published at Insider Monkey.