UBS has reiterated its backing for J Sainsbury, the UK's second-largest supermarket, arguing that strong execution should help it keep grabbing market share even in a sluggish grocery trade.
The broker kept its buy rating and 395p price target, implying scope for the shares to climb almost a fifth from Friday's close of 335p.
It pointed to a reassuring first-half update on 22 October, pencilling in group operating profit of £525 million and further progress despite tough conditions.
UBS did trim its forecast for grocery sales growth to 2.5%, from 4%, blaming a softer market and the failure of food inflation to pick up as expected.
Even so, it reckons Sainsbury's is executing well in what it called a rational industry.
Its own consumer survey work offered eye-catching support, showing Sainsbury's has edged ahead of Aldi on customer recommendation for the first time since early 2017.
Shoppers also rate it more highly on value than Tesco and Asda, the bank said, with store visits holding steady over the past year.
Sainsbury's is meanwhile pressing ahead with the sale of Argos, its general merchandise arm.
The disposal to Swift, due to complete in February, should sharpen the group's focus on food and remove a long-running worry for investors.
UBS nudged its full-year profit forecast down fractionally to £1,066 million, still near the top of Sainsbury's own guidance range, and expects the grocer to tighten that range when it reports.
At about 14 times forecast earnings and offering a dividend yield of 4.3%, the shares still look attractive to the broker.
The note lands with Sainsbury's stock having drifted back from a spring peak, leaving UBS's target looking increasingly punchy against the current price.
