UBS: Whole Foods' good news might already be 'priced in'

Whole Foods stock is having a big week, but investment bank UBS says don't buy into the hype.

UBS equity analyst Michael Lasser sent a note to clients on April 10 reinforcing his "sell" rating and $25 price target for the grocer, which would be a nearly 27% drop from today's price of $34.10.

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Lasser's note follows a 13D SEC filing that revealed that activist investment firm JANA Partners had taken an 8.3% stake in Whole Foods. The filing revealed that the firm wants to speed up the turnaround process at Whole Foods.

The stock moved nearly 10% higher after that news. Whole foods stock moved higher again Wednesday after Bloomberg reported that Amazon considered a bid for the supermarket last fall.

After taking JANA's involvement into consideration, UBS is still skeptical about further gains in the stock, saying that the best possible outcome is likely "priced in:"

"While JANA's plans are ambitious, we think WFM's challenges run deep and that it needs to evolve its business model. With the stock trading at 25x its NTM EPS, we think a favorable outcome is already more than priced in. Thus, we think it's best to be cautious."

UBS recounted some of the struggles that have gotten Whole Foods into trouble in the last several years. One of the biggest problems the organic supermarket has faced has been the entrance of less expensive healthy shopping alternatives for consumers at stores such as Kroger and Sprouts Farmers Market.

The note suggested that to regain market share, Whole Foods would need to cut prices by 10-15%, which would have a significant negative impact on the grocer's profit margins.

Whole Foods is up 1.64% today to $34.10.

Click here for a real-time Whole Foods chart.

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RELATED: Prices at Whole Foods vs. Trader Joe's

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Prices at Whole Foods vs. Trader Joe's
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Prices at Whole Foods vs. Trader Joe's

Red peppers

Trader Joe's: $0.99 each 

Whole Foods: $3.99 per pound

One medium-sized red bell pepper weighed nearly one pound, so peppers were far more expensive at Whole Foods. 

Organic avocados

Trader Joe's: $2.29 each 

Whole Foods: $2.79 each 

Organic strawberries

Trader Joe's: $5.99 for 16 ounces

Whole Foods: $5.99 for 16 ounces

Strawberries were expensive across the board.

Green seedless grapes

Trader Joe's: $3.99 for 20 ounces, or $3.19 for one pound

Whole Foods: $2.99 for one pound (on sale from $3.99 per pound)

Organic bananas

Trader Joe's: $0.29 each

Whole Foods: $0.99 per pound

Three medium-sized bananas weighed around a pound, so this was a close call.

Multigrain bread

Trader Joe's: $2.99 for 24 ounces

Whole Foods: $3.49 for 24 ounces

Buying two loaves of bread at Whole Foods would have brought the cost down to a comparable $3 per loaf. 

White bread

Trader Joe's: $2.69 for 24 ounces

Whole Foods: $3.49 for 24 ounces

There was a big difference, though the white bread at Whole Foods was organic.

Ground beef

Trader Joe's: $4.99 per pound

Whole Foods: $9.99 per pound

Again, the cheapest option at Whole Foods was organic. 

Ground turkey

Trader Joe's: $3.99 per pound

Whole Foods: $7.99 per pound

Uncured sliced bacon

Trader Joe's: $5.49 for 12 ounces

Whole Foods: $4.99 for 12 ounces

Whole Foods is the winner here and there was a good selection on sale. 

Organic white potatoes

Trader Joe's: $1.oo per pound

Whole Foods: $1.20 per pound

Organic white tortilla chips

Trader Joe's: $2.69 for 16 ounces

Whole Foods: $2.99 for 16 ounces

Vanilla ice cream

Trader Joe's: $3.99 for 32 fluid ounces

Whole Foods: $4.99 for 32 fluid ounces (organic)

Trader Joe's ice cream was cheaper but the 365 version at Whole Foods was organic. 

Parmesan 

Trader Joe's: $5.38 for one pound

Whole Foods: $12.77 for one pound

Organic mayonnaise

Trader Joe's: $3.69 for 16 ounces

Whole Foods: $3.69 for 16 ounces

A dead heat!

Extra virgin olive oil

Trader Joe's: $6.99 for 33.8 fluid ounces

Whole Foods: $9.99 for 33.8 fluid ounces

Organic marinara sauce

Trader Joe's: $2.49 for 25 ounces

Whole Foods: $2.99 for 25 ounces

Organic spaghetti

Trader Joe's: $1.29 for 16 ounces

Whole Foods: $1.49 for 16 ounces

Chili flakes

Trader Joe's: $1.99 for 1.3 ounces

Whole Foods: $3.99 for 0.99 ounces

Dried basil

Trader Joe's: $1.99 for 0.3 ounces

Whole Foods: $2.99 for 0.53 ounces

Organic crunchy peanut butter

Trader Joe's: $3.49 for 16 ounces

Whole Foods: $3.99 for 16 ounces

Organic milk

Trader Joe's: $3.49 for a half gallon

Whole Foods: $2.39 for a half gallon

The milk at Trader Joe's is organic.

Organic plain yogurt

Trader Joe's: $3.99 for 32 ounces

Whole Foods: $3.39 for 32 ounces

Whoa! A great deal on organic plain yogurt at Whole Foods. 

Frozen peas

Trader Joe's: $1.29 for 16 ounces

Whole Foods: $1.39 for 16 ounces

Almond Breeze almond milk

Trader Joe's: $1.99 for 32.8 ounces

Whole Foods: $2.19 for 32.8 ounces

Both stores stock Almond Breeze almond milk, we did a direct comparison of the product: Trader Joe's was $0.20 cheaper.

Hummus

Trader Joe's: $1.99 for 8 ounces

Whole Foods: $2.19 for 8 ounces

Eggs

Trader Joe's: $2.69 for a dozen cage-free large eggs

Whole Foods: $4.39 for a dozen organic large eggs

Note that Whole Foods' eggs are organic and Trader Joe's are cage free. 

Rolled oats

Trader Joe's: $3.99 for 32 ounces, or $2.00 per pound

Whole Foods: $3.19 for 18 ounces, or $2.84 per pound

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SEE ALSO: Whole Foods shares jump on report that Amazon had considered a bid (WFM, AMZN)

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