Sainsbury’s Share Price Expected to Surge on Q1 Sales Update

on Jun 11, 2013
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Sainsbury’s share price (LON:SBRY) is expected to rise tomorrow, June 12, after Tesco’s (LON:TSCO) major rival issues its first quarter trading statement.

Morgan Stanley analysts have forecast that Sainsbury’s will report a 0.6 percent increase in like-for-like sales in the 12 weeks to June 8, although more optimistic projections see growth of as much as 3.5 percent. A 0.6 percent increase would be Sainsbury’s worst performance in more than three years but according to Morgan Stanley analyst Edouard Aubin, it would still better listed rivals’ figures. Aubin has partially attributed the slowdown to the extra bank holiday and the Queen’s Diamond Jubilee falling in the same period in 2012.

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“While Q1 will likely mark Sainsbury’s softest like-for-like sales growth in over three years, we note that, unlike listed competitors Tesco and Morrisons, Sainsbury’s like-for-like sales remain in positive territory and that, quarter to date, Sainsbury’s has continued to gain market share,” Aubin said in a note to clients last week.
**Justin King Pockets 23 Percent Higher Pay**

The Guardian reported last week that Sainsbury’s chief executive officer Justin King had seen his pay increased by 23 percent as the grocer continued to outperform rivals and exceed targets. King, who has been at the helm of the company for more than nine years, earned a base salary of ₤940,000 in the full-year to March 2013, saw his bonus almost double to ₤996,000 and was awarded ₤313,000 in pension benefits, ₤975,000 in shares deferred for two years and a further ₤1 million in partly deferred shares.

Sainsbury’s annual report published last month showed a 6.2 percent rise in full-year profit. The UK’s third largest supermarket chain has impressed investors with 33 straight quarters of sales growth but some worry that the increasing popularity of online shopping will dent future profit.
**Analysts on Sainsbury’s**
Sainsbury’s share price has risen by more than 25 percent in one year, topping Tesco’s 16 percent increase in the same period. Last week, Tesco reported a one percent decline in like-for-like sales for the first quarter of its fiscal year (Tesco’s Share Price Takes a Dive on Drop in Q1 Sales).

!m[Sainsbury (LON:SBRY) ](/uploads/story/2936/thumbs/pic_1_inline.jpg)
BNP Paribas reaffirmed their underperform rating on Sainsbury’s shares and gave them a price target of ₤3.60 last week. As of today eight analysts have issued a “sell” rating on the shares, twelve have given it a “hold” rating and five have assigned a “buy” rating. Sainsbury’s has an average rating of “hold” and a consensus price target of 3.6370.
**Sainsbury’s share price was ₤3.6330 as of 11.06.2013, 08.02 BST.**
**Tesco’s share price was ₤3.4880 as of 11.06.2013, 08.02 BST.**

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