11:13 AM EDT, 10/13/2025 (MT Newswires) -- Sprouts Farmers Market's ( SFM ) earnings growth may slow in the near term due to tough comparisons and loyalty program costs but medium-term growth remains achievable, RBC Capital Markets said in a note Monday.

Analysts, including Steven Shemesh, said that from 2015 to 2019, the company averaged 3% comparable sales growth. This rate accelerated through 2024, peaking at 11.7% in Q1 2025.

Merchandising improvements, better real estate analytics, marketing shift, e-commerce expansion and organic sales catch-up, are the key, mostly structural, changes that explain the acceleration, the analysts added.

For Q3, the analysts expect comparable sales to grow 7.5%, in line with both company guidance and consensus, operating margin is projected to expand 60 basis points year-over-year to 7%, in line with consensus, and gross margin is estimated at 38.3%, slightly below the consensus of 38.4%. Selling, General & Administrative is expected to improve modestly due to leverage from strong comps, but partially offset by costs tied to the loyalty program rollout.

"While EPS growth is poised to decelerate over the next few quarters (tough compares and costs associated with the loyalty program rollout), we believe low double-digit revenue growth (comparable store sales growth of 4% to 5% and unit growth of 8% to 10%) and low/mid-teens EPS growth is achievable over the medium-term," the analsysts said.

For fiscal 2025, management is guiding comparable sales of over 7.5% to 9% plus, with RBC estimating over 8.3%. The analysts said that rather than raising the full range, management is expected to raise the lower end only to manage expectations. They added that they expect EPS of $5.36.

RBC upgraded Sprouts Farmers Market ( SFM ) to outperform from sector perform and cut its price target to $148 from $176. Shares of the company were up 5.5% in recent trading.

Price: 108.36, Change: +5.62, Percent Change: +5.47