JD Sports Fashion PLC (LSE:JD.) is one of two standouts in a generally strong sportswear sector, according to the analysts at JP Morgan.
The trainer specialist offers the best combination of growth, margins, returns and valuation in the sector, with well-underpinned estimates for next year and a strong Christmas trading update ahead as suggested by recent peer reporting and US credit card data for the sector.
Adidas AG though remains JP Morgan’s highest conviction 'overweight' recommendation.
Good data on brand momentum and a likely disproportionate benefit from the drivers of demand (e.g. higher than average exposure to football) and gross margins (unwind of Kanye West/Yeezy markdown) next year, "we still see upside to consensus estimates", the analysts said.
Price targets are 211p for JD and €230 for Adidas.
Elsewhere, the US bank is less keen on luxury goods generally with only jewellery group Richemont on its overweight list following a downgrade of LVMH to 'hold'.
UK-listed Burberry is rated 'neutral' with a 1,650p price target.