SFM Stock Forecast & Price Target

Sprouts Farmers Market Inc. has shown a positive trajectory in e-commerce sales, increasing from approximately 11% of total sales in 2021 to around 15% as of now, attributed to strategic partnerships with delivery services like Instacart, DoorDash, and UberEats. The company's initiative to launch approximately 300 Sprouts Brand products in 2024 has also significantly enhanced its brand penetration, rising from about 20% in 2023 to an estimated 24% in the first half of 2025. Furthermore, operational metrics reflect a healthy growth environment, with a notable 135 basis points expansion in operating margin year-over-year to 8.1%, alongside stabilized comparable store sales growth of 4% in September, which underscores a robust recovery and promising outlook for the business.

Sprouts Farmers Market's stock outlook has turned negative due to several financial factors, including a projected reduction in its 2026 earnings per share (EPS) estimate from $6.01 to $5.65, reflecting concerns over increased promotional intensity and fixed cost deleverage. Management anticipates waning gross margin expansion in the latter half of the year, with expectations of only 40-50 basis points compared to 160 basis points in the first half, attributed to challenging sales comparisons and reduced supply chain capacity. Additionally, a noticeable sales slowdown in September has contributed to investor caution, further exacerbating the decline in stock performance, which has seen a drop of approximately 42% since June, underperforming both grocery peers and the broader market significantly.