Kroger (KR)

Kroger (KR - Analyst Report) reported better-than-expected first quarter earnings per share, beating our estimate by $0.04 per share. We are increasing our EPS estimates for this year and next to reflect the first quarter upside.

For fiscal year 2009, Kroger expects identical-store sales of 3% to 4% and earnings per share of $2.00 to $2.05. That said, we still believe that the company may be able to beat its fiscal year 2009 EPS guidance, due to a higher mix of private-label brand sales and continued market share gains.

We reiterate our Buy rating on Kroger shares. Our six-month target price is $28, up from $27.