Brokers note - Morrisons
Bernstein Research has increased its forecasts and target price on Morrisons following its Q1 trading update yesterday (July 21).The broker has pushed up its earnings per share forecast for 2009 by 8% to 20p following guidance from Morrisons management that pre-tax profits are expected to be 10% higher than consensus estimates of £664 million.
However, Bernstein has reservations on whether Morrisons can close the margin gap with its competitors. It therefore believes the current valuation fairly reflects the earnings prospects for the group, following its 8% increase yesterday. To reflect the upgrades to earnings and share price the broker has upped its target price from 260p to 300p, which compares with an underlying share price of 270p.
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