Any weakness in J Sainsbury’s (LON:SBRY) shares following the grocer’s results next week could make a good entry point for investors, analysts at Berenberg have said. The comments came as the broker reiterated its bullish stance on the blue-chip supermarket.
Sainsbury’s share price has slipped into the red in today’s session, having lost 0.76 percent to 240.65p as of 10:20 BST, underperforming the broader UK market, with the benchmark FTSE 100 index having climbed into positive territory and currently standing 0.20 percent higher at 7,507.94 points. The group’s shares have lost more than five percent of their value over the past year, and are down by just under four percent in the year-to-date.
Good entry opportunity
Berenberg reiterated its ‘buy’ recommendation and price target of 300p on Sainsbury’s yesterday, ahead of the grocer’s upcoming half-year results. Citywire quoted the broker’s analyst Dusan Milosavljevic as forecasting that the supermarket would unveil underlying first half profits before tax of around £244 million, marking the end of margin declines as the grocery business recovers and benefits from the acquisition of Argos this year.
“We believe some elements of H1 weakness are already priced in with Sainsbury’s trading at 25-30% discount to UK peers despite improving like-for-like momentum,” the analyst continued, as quoted by the newswire. “On our earnings per share estimates, the shares trade at...9.5x price/earnings. We would buy Sainsbury’s on any weakness following the H1 results.”
Sainsbury’s results will come after the latest Kantar Worldpanel data recently showed that sales at the grocer rose 1.9 percent in the 12 weeks to October 12. The group’s market share, however, dipped 0.2 percentage points to 15.8 percent, with German discounters continuing to pressure the UK’s ‘Big Four’ grocers.
Sainsbury’s is scheduled to update investors on its performance on November 9, while blue-chip peer Morrisons (LON:MRW) reports tomorrow.