Sainsbury’s shares are jumping this morning. Here’s why
Sainsbury’s shares have climbed over two per cent this morning after Bernstein Research upgraded the supermarket's stock this morning to ‘outperform’.
Shares took a tumble last week after chief executive Justin King announced he's leaving. The initial five per cent drop (shares later stabilised) was a nod to King's performance – he's widely hailed for turning around the fortunes of the supermarket, with profits trebling during his tenure.
Bernstein's note, entitled “In control of its own destiny”, labels Sainsbury’s a “distinctive offer” that will continue to take market share from undifferentiated retailers like Tesco and Morrison.
Its target price for shares is £4.30p. Shares are currently trading at £3.50p.
Bernstein’s highlighted three things it thinks make the UK’s second-largest supermarket a “well run retailer” and mean it’s seen a five year run of market share gains:
“Live well for less”
The store’s distinct retail offer – it’s blatant branding, for example – mean people know why they shop there.
Store of the week
Sainsbury’s is often voted Grocer magazine’s “store of the week”, recognising its great execution as a big supermarket.
Online and convenience
It made a quick and smooth shift into online and convenience and growth formats, seeing substantial like-for-like growth because of strategy.
Bernstein added that UK food retail is about to see a rebound – it expects two per cent growth – and recent concerns around Sainsbury’s have created a “compelling entry point”.
It forecasts revenue growth of 5-6 per cent and values Sainsbury’s at 11.5x full-year earnings for 2014.
Shares are currently up 2.2 per cent:
(Google)