By Subrat Patnaik

(Reuters) - Whole Foods Market Inc's <WFM.O> shares plunged on Thursday as the company's efforts to position itself as a competitively priced grocer yielded little results in the third quarter.

The upscale grocer reported its fourth straight quarter of same-store sales decline and forecast a disappointing current-quarter profit forecast as competition, deflation and its own efforts to cut prices hit results.

Whole Foods' shares fell nearly 10 percent to $30.32 on Thursday on the New York Stock Exchange - their biggest intraday percentage drop in a year.

The stock should be trading at $27.30, a 19 percent discount to Wednesday's close of $33.64, according to StarMine's intrinsic valuation model, suggesting that the stock is overpriced.

The shares, which have declined 18 percent in the past 12 months, trades at 21.69 times forward earnings, compared with its peer median of 18.84.

"The most worrisome development about Whole Foods' latest results is the continued sales deceleration heading into FY17," Pivotal Research Group analyst Ajay Jain wrote in a note.

Whole Foods, dubbed as "Whole Paycheck" for its lofty prices, has been spending heavily on a new value-oriented chain called "365 by Whole Foods Market", which offers lower prices and more technology than its supermarkets.

Whole Foods opened the first 365 store in Silver Lake, California in the third quarter and has opened another one in the current quarter in Lake Oswego, Oregon.

But the company is getting badly hit by competition from cheaper alternatives such as Kroger Co <KR.N>, Wegmans and H-E-B supermarkets, which have successfully expanded into fresh and organic products that Whole Foods pioneered.

Analysts said the company's new 365 stores and other cost-cutting and discounting plans might help it next year, but these factors will do little to offset near-term competitive concerns.

As the company opens more of the smaller stores, it will have to cut down the number of standard Whole Food stores openings, Guggenheim Securities analyst John Heinbockel said.

"We are encouraged by 365 and other behind-the-scenes initiatives, but believe it's prudent to wait for signs WFM is reaccelerating legacy business trends in FY17," Wedbush analyst Phil Terpolilli said in a note, referring to the company's push to cut prices and operational costs, and find cheaper ways to procure goods.

(Reporting by Subrat Patnaik in Bengaluru, Additional reporting by Siddharth Cavale; Editing by Sayantani Ghosh and Don Sebastian)