Brokers note - Sainsbury's
Credit Suisse re-iterated its 'Underperform' recommendation on Sainsbury's following its Q2 trading update.
The broker says the slowing like-for-like sales trend, with an exit-Q2 of as low as 3.5%, and comments from Tesco this week could be a sign that Sainsbury’s is beginning to lose market share both to an improving Tesco and the fresh food specialists Morrison and Waitrose.
Credit Suisse believes that although Sainsbury’s is delivering on forecasted numbers it is not low-rated. On a PE of 13.5x earnings for 2009/10 and 11.9x for 2010/11 the broker says it is on the same multiple as the faster growing and better-placed Morrison. It retains its price target of 300p, which compares with an underlying share price of 312.7p.
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