The Coles Group Ltd (ASX: COL) share price is trading lower on Wednesday.
At the time of writing, the supermarket giant's shares are down almost 3% to $16.83.
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Why is the Coles share price falling?
There have been a couple of catalysts for the weakness in the Coles share price on Wednesday.
The first is broad market weakness following a shocking night of trade on Wall Street.
US stocks had their worst session in over two years after economic data revealed that inflation isn't easing. This defied expectations and sparked fears that aggressive interest rate hikes will be required.
What else?
Also weighing on the Coles share price has been a broker note out of Goldman Sachs this morning.
According to the note, the broker has downgraded the company's shares to a sell rating with a reduced price target of $15.60.
The broker made the move on the belief that Coles could lose market share due to being a laggard in respect to digital transformation. It also fears that the company's margins could be pressured as it enters into a high investment cycle.
Goldman explained:
Downgrade COL from Neutral to Sell with new TP of A$15.60/sh, implying 9.5% share price downside due to laggard in digital transformation resulting in market share losses and entrance into high investment cycle for digital and supply chain pressuring margins over FY23/24. Our FY23-25e NPAT is cut by 2.4%-8.9% to reflect lower comp growth as higher digital transformation related opex. Our TP implies FY24 P/E of 20.0 vs historical average of 21.5.
