Morrisons share price rallies as BofA Merrill Lynch turns bullish on grocer

on Mar 30, 2017
Updated: Oct 21, 2019
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Shares in Wm Morrison Supermarkets (LON:MRW) have gained more than one percent in London in today’s session, with analysts at Bank of America Merrill Lynch turning bullish on the blue-chip grocer, arguing that the company has one of the strongest balance sheets in the sector. The comments come after the FTSE 100 supermarket recently unveiled a rise in full-year profits.

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As of 10:08 BST, Morrisons’ share price had added 1.52 percent to stand at 240.80p, outperforming the broader UK market, with the benchmark FTSE 100 index currently 0.04 percent better off at 7,376.54 points. The group’s shares have gained just under 20 percent over the past year, and are up by some four percent in the year-to-date.
BofA Merrill Lynch lifted its stance on Morrisons from ‘underperform’ to ‘buy’ today and hiked its price target on the shares from 220p to 275p.

“We believe that its strong balance sheet position and resultant cash optionality deserves a premium,” the analysts explained, as quoted by Sharecast, adding that the stock looked as if it was trading at a 20-percent discount versus the sector. The broker further pointed out that Morrisons chief executive David Potts’ strategic moves, which include a new wholesale partnership with Amazon and Rontec and renegotiation of its Ocado contract, should help expand future earnings without the need for significant capital.
The comments are a boost for the blue-chip grocer, which recently warned of ‘uncertainties ahead,’ even as it delivered a near 50-percent rise in full-year profits.
The 16 analysts offering 12-month price targets for Morrisons for the Financial Times have a median target of 212.50p on the shares, with a high estimate of 260.00p and a low estimate of 170.00p. As of March 29, the consensus forecast amongst 19 polled investment analysts covering the blue-chip supermarket has it that the company will underperform the market.
As of 10:40 BST, Thursday, 30 March, Wm. Morrison Supermarkets plc share price is 241.50p.

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