Shore Capital remains bullish on J Sainsbury (LON:SBRY), despite noting that competitors are eating into the supermarket’s performance. The comments follow the blue-chip grocer’s results yesterday when the company posted a small rise in quarterly sales.
The results boosted Sainsbury’s share price which rose one percent to close at 261.40p yesterday, outperforming the broader market, with the benchmark FTSE 100 index ending the session 0.21 percent higher at 7,290.49 points. The supermarket’s shares have gained some eight percent over the past year, as compared with an over 23-percent rise in the Footsie.
Shore Capital reiterated its ‘buy’ stance on Sainsbury’s yesterday, with a price target of 259p on the shares. The move came after the company reported that its total retail sales had inched 0.8 percent higher in the 15 weeks to January 7, while the group’s like-for-like sales had come in 0.1 percent higher, with the results surpassing analyst forecasts for a decline.
Citywire quoted Shore Capital’s analyst Clive Black as commenting that for some years Sainsbury’s had outperformed and it had “made hay when its supermarket competitors were faltering”.
The third-quarter results show that “this is not the case. In fact, those competitors, most particularly Tesco, are eating into Sainsbury’s trading performance,” the analyst pointed out, adding that the broker now saw “a Sainsbury’s supermarket that is underperforming the UK market and, at the fringes, losing market share, especially in core grocery”. Shore Capital, however, noted that Sainsbury’s was now a broader business following its Argos acquisition.
AlphaValue meanwhile reiterated its ‘add’ rating on Sainsbury’s yesterday, valuing the shares at 295p. According to MarketBeat, the blue-chip supermarket currently has a consensus ‘hold’ rating and an average price target of 256.81p.