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Whole Foods: A Victim Of Its Own Success? Health Trend Has Gone Mainstream

Whole Foods: A Victim Of Its Own Success? Health Trend Has Gone Mainstream - Whole Foods Market, Inc. NASDAQ:WFM

The health conscious trend Whole Foods Market, Inc. WFM 1.33% helped pioneer may be leading to its downfall.

At least that is what Goldman Sachs is saying after downgrading Whole Foods to Sell from its previously held Neutral rating.

"Whole Foods is experiencing a competitive barrage, losing share in its core natural and organic business to a variety of players," said the investment bank.

Organic food once seen as a luxury, is becoming more of the norm and is increasingly available in supermarkets around the country and at a lower price point than the famously expensive Whole Foods.

As health becomes more of a trend, it has become more widespread and less of the niche in which Whole Foods operated so well for so long. "Wellness has gone mass, and it is not coming back, never again to be relegated to niche specialty retailers serving price-insensitive, early adopters," added Goldman Sachs.

Related Link: Is Whole Foods Unable To Compete In The Organic Grocery Space?

Whole Foods has responded to this shifting trend by announcing its lower cost "365" stores. Whole Foods is set to release earnings on Wednesday after the market closes.

Not Everyone Is Bearish

Macquarie research had a different take on the Whole Foods situation and upgraded the stock to Outperform from Neutral, with a price target now at $38.

"We expect management, similar to prior public commentary, to highlight the positive attributes of the 365 concept which appear to include basket size, sales per square foot, expense rate differential and incremental demographic reach," said Macquarie in an analyst note.

Analysts are seemingly mixed about the future of Whole Foods Market; a much clearer picture of the trajectory of the business will emerge when quarterly results are released Wednesday.

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DateFirmActionFromTo
Jul 2016Goldman SachsDowngradesBuySell
Jul 2016MacquarieUpgradesNeutralOutperform
Jun 2016Northcoast ResearchDowngradesNeutralSell

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