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The City view - Sainsbury's
Archived article dated Friday March 20th 2009
Credit Suisse is predicting strong fourth quarter results from Sainsbury's next week but it re-iterates its 'Underperform' recommendation on the company.
The broker suggests the figures will demonstrate the robust top-line growth trends that the food retailers continue to enjoy and that the trading conditions are not unduly tough for the large grocers. Credit Suisse is therefore comfortable with its ahead-of-consensus pre-tax forecasts of £540 million for 2008/9.
However, the broker still holds the view that Sainsbury's is more exposed to the consumer downturn than more value-focused operators such as Morrisons. On a PE of 13x 2009/10 earnings Credit Suisse believes it is unjustifiably on a premium to Tesco and at an insufficient discount to Morrisons. It also maintains its price target of 300p, which compares with an underlying share price of 309.25p
Tagged as: sainsburys | city broker
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