Wells Fargo Downgrades Kroger (KR) to Equal Weight
On February 25, 2025, Wells Fargo analyst Edward Kelly downgraded Kroger (NYSE: KR) from Overweight to Equal Weight, simultaneously lowering the price target from $70 to $68. The revised target represents a 2.86% reduction from the previous level. Despite the downgrade, the broader analyst consensus on Kroger remains constructive, with an average rating of Overweight and a mean price target of $73.29, according to FactSet data.
Why the Rating Changed
While Wells Fargo did not publicly detail an extensive list of specific catalysts behind the downgrade, several observations from the available research and surrounding context help frame the decision:
- Broader grocery sector reassessment: Notably, Wells Fargo’s Kroger downgrade was not an isolated move. On the same day, the firm also downgraded Grocery Outlet (NASDAQ: GO) from Overweight to Equal Weight, slashing that company’s price target from $16.00 to $10.50. This suggests a wider reassessment of the grocery retail sector by Wells Fargo’s consumer team, potentially reflecting concerns about margin pressures, competitive dynamics, or a more cautious consumer spending outlook across the space.
- Limited upside to the price target: With the new $68 price target and shares trading near current levels, analyst Edward Kelly appears to see limited room for further appreciation from here. The move from Overweight to Equal Weight signals that Kelly believes Kroger’s stock is now fairly valued relative to its peers, rather than offering the outsized return potential that previously justified a more bullish stance.
- Consensus still leans positive: It is worth noting that Wells Fargo’s revised view puts the firm below the broader Street consensus. The average analyst price target of $73.29 suggests that many other firms still see meaningful upside for Kroger shares, making this downgrade a relatively more cautious call within the analyst community.
Kroger’s Dividend Profile
For income-focused investors, Kroger continues to offer a steady dividend. Here are the key details:
- Annual Dividend: $1.37 per share
- Dividend Yield: 1.96%
- Most Recent Ex-Dividend Date: February 12, 2026
Kroger’s nearly 2% yield provides a modest income stream, and the company has a long track record of returning capital to shareholders through both dividends and share buybacks. While the yield alone may not be a primary draw compared to higher-yielding dividend stocks, it adds to total return for investors who remain positioned in the name.
What This Means for Investors
Wells Fargo’s shift to Equal Weight does not signal a bearish outlook on Kroger — rather, it reflects a view that the risk-reward profile has become more balanced. Investors already holding shares may take comfort in the fact that the broader analyst consensus remains favorable, with a mean target well above the current trading range. However, those considering initiating a new position may want to weigh the more cautious tone from Wells Fargo against the still-positive consensus view, particularly in the context of what appears to be a sector-wide recalibration from the firm.
Disclaimer: This article is for informational purposes only and does not constitute financial advice. Investors should conduct their own research and consult with a qualified financial advisor before making any investment decisions.