Competition To Take Bite Out Of $WFM, Say Investors

Whole Foods, $WFM, gave investors a stomachache Wednesday.

The mecca of organic moms, vegans and folks who read the ingredients on packaged foods is facing increased competition from the likes of Walmart, $WMT, Trader Joe’s, and The Fresh Market, $TFM, among others. And most investors on believe all the vying for healthy eaters is destined to take a bite out of prices and earnings.

Whole Foods fell more than 1.8% by 3p.m. Sentiment on the stock is 64% bearish, according to StockTwits’ analytics.

$WFM don't like the story here walked in yesterday and left after 20 mins w/nothing in hand. hit Trader's for 1/2 price — organic to boot.

— abaris (@abaris) Apr. 16 at 02:20 PM

In a statement Tuesday, Wal-Mart said that it would bring “every day low prices” to its organic products. “As part of our strategy of being relevant to customers, we want them to know that we have these products, and that we have them at prices that are better than those offered by the competition,” the company said. “In organic food products, as in all of our categories, our aim is to bring customers every day low prices, and to offer them the best prices in the marketplace on those products.”

The fighting words from Walmart, which is known to take losses on some products in order to gain market share, sent Whole Foods through its 200-day moving average. Some investors said the $48 stock didn’t have support for another few dollars and called for further declines.

$WFM – The stock is very weak and lots o compaies doing the same thing now. If it breaks $48.50 by end of day Monday we go to $43.85

— Todd Spigel (@tspigel) Apr. 13 at 08:16 PM

$WFM short yesterday. Increasing competition in organic food, poor charts. Thanks to @RiskReversal for first pointing it out back in Feb.

— Matt Schöner (@ms82494) Apr. 15 at 12:41 PM

Bullish investors said that shoppers would still flock to the store, regardless of cheaper alternatives. Health-conscience consumers are more likely to trust Whole Foods to deliver on non-genetically modified, raw, healthy foods than a mega-retailer known for selling inexpensive goods manufactured in China.

$WFM demand for more than 1,000 new stores over 2014 and beyond. Expect popularity to increase, particularly on West Coast.

— Farhan Ahmad (@nahrafsfa) Apr. 11 at 05:00 AM

Analysts agree. The stock has 13 buy ratings, 7 holds and 1 sell, according to the Analyst Ratings Network. Consensus price target is $62.45.

But most investors Wednesday stood with the bears case.

$WFM just a matter of time until it fills gap. Will bounce and still make its way dwn.

— Patricia Baum (@Ibdinv) Apr. 15 at 11:08 AM

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