JD Sports Fashion PLC (LSE:JD.) is the top riser in the FTSE 100 on Friday following positive comments from broker, Berenberg.
The bank said that since the initial excitement at the time of its capital markets day in February, the shares have fallen by nearly 30% due to macro uncertainties, peer warnings and perceived execution risks.
“This looks harsh to us, as consensus earnings have continued to rise, and we think risks are lower than the market fears,” Berenberg analysts said.
“We also think investors still underappreciate the strength of JD’s model, its positioning and the international opportunity,” it added.
“JD is more than a retailer – it is a global brand dominating “mindshare” of the generation-Z consumer, with impressive local and global social media engagement (eg c66m TikTok likes versus an average c28m for sports brands and c5m for sports retail peers),” Berenberg said.
It described the JD fascia as the “jewel in the crown,” while recent acquisitions add “lots of strategic value”.
Near-term concerns are well overdone with the read-across from Foot Locker and Dick’s Sporting Goods results in the US “limited.”
The bank thinks JD offers extreme value for the quality and growth on offer, looking cheap against every peer group.
“The stock is priced for significant downgrades, which we do not think will materialise, creating an attractive entry point ahead of near-term catalysts,” the bank said, noting half-year results ahead.
“JD is our top pick in the sector,” the broker concluded.
Shares rose 2.0% to 136.90p.