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Broker Round-up Part 1: Sainsbury's, Tesco, Morrisons, Hornby and Young's

Last updated: 16:28 08 Jun 2012 BST, First published: 20:28 08 Jun 2012 BST

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With the Jubilee weekend now a distant memory, retail focus has turned to the next major event in the calendar – the London Olympics.

With just 49 days to go until it all kicks off, the high street is warming up for another spending extravaganza.

Brokers seem to share this view, with JP Morgan Cazenove predicting booming sales over the summer.

Despite their “weak fundamentals”, the heavyweight broker reckons the global sporting showcase could offer a short-term trading opportunity for investors in supermarket stocks ahead of first quarter results released next week.

It expects Sainsbury’s (LON:SBRY) to keep up the good work and lead the way in like-for-like terms, slapping an ‘underweight’ tag on the stock with a target price of 267 pence.

JP Morgan rates market leader Tesco (LON:TSCO) as ‘overweight’, targeting a price of 406 pence and it expects the supermarket giant to comment on the operational turnaround in its statement. Elsewhere, the broker has Morrisons (LON:MRW) down as ‘neutral’ at 270 pence.

Supermarkets won’t be the only ones to benefit from the Games however.

Numis reckons toy manufacturer Hornby (LON:HRN) will kick start its turnaround with the launch of its London 2012 range, including limited edition model railway sets and a Scalextric Velodrome Cycling set.

After a tough trading period where the company reported a fall in profits, the broker sees things picking up – so much so it has upgraded the stock to ‘buy’ from ‘add’, such is its optimistic outlook.

JP Morgan also sees the public topping up their glasses during the bonanza.

The broker is sure more pints will be pulled at Young’s brewery (LON:YNGA) as punters from abroad flood the capital.

And the locations of The Cow, The Calf at Stratford and The Betjeman Arms at St Pancras, all on the main transport routes to the stadium, will ensure they won’t have to travel far to quench their thirst.

The broker initiates a price target of 700 pence against the current price of 616 pence, down more than 11 pence today, and retains an ‘overweight’ rating on the pub.

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