Shares in Wm Morrison Supermarkets (LON:MRW) have jumped in London in today’s session as UBS hiked its rating and price target on the blue-chip supermarket. Proactive Investors quoted the analysts as pointing to the slowdown in discounter store openings.
As of 13:09 BST, Morrisons’ share price had added 1.32 percent to 260.10p, outperforming the broader UK market, with the benchmark FTSE 100 index currently standing 0.14 percent higher at 7,712.35 points. The group’s shares have added just under 10 percent to their value over the past year, as compared with about a 4.7-percent gain in the Footsie.
UBS lifts stance on Morrisons
UBS lifted its rating on Morrisons from ‘neutral’ to ‘buy’ today and hiked its price target on the shares from 225p to 300p. Proactive Investors quoted the analysts as saying that discount competitors such as Aldi had been a ‘key source’ of the grocer’s switching losses over recent years, but that the German grocer’s store openings had slowed sharply in the first half of the year, reducing the pressure on Morrisons to keep reinvesting.
As a result of the reduced competitive pressure, the broker argues that Morrisons’ management were now in a position to allow “more of its ‘self-help’ efficiencies to drop-through to margin”, forecasting 25 base percentage point growth in the company’s EBIT margins in its 2019 and 2020 financial years.
Other analysts on blue-chip group
The 13 analysts offering 12-month price targets for Morrisons for the Financial Times have a median target of 240.00p on the shares, with a high estimate of 275.00p and a low estimate of 195.00p. As of July 27, the consensus forecast amongst 19 polled investment analysts covering the blue-chip group advises investors to hold their position in the company.