Jefferies has affirmed a positive outlook for J Sainsbury PLC (LSE:SBRY) following the grocer's strong performance in the fourth quarter of the 2023/2024 fiscal year.
Despite providing a wide profit forecast range for 2024/2025, Jefferies believes that the higher end is achievable, given a potentially favourable consumer environment.
Sainsbury's ended the fiscal year on a high note, with a profit before tax (PBT) of £701 million, surpassing both the consensus estimate of £699 million and the company's own guidance of £670 million to £700 million.
The company reported significant growth in grocery sales, with a 7.3% increase, notably above the consensus predictions of 5.9%.
Looking forward, Sainsbury's has set a broad guidance range for PBT in 2024/2025, expecting it to be between £690 million and £765 million.
While Jefferies anticipates that consensus estimates may settle around £730 million, it reckons there is headroom to overachieve against that figure. This optimism is rooted in strong industry growth, market share gains, and potential margin expansion.
The American bank also highlights Sainsbury’s continued strength in grocery sales, projecting ongoing momentum and market outperformance into the next fiscal year.
It reiterated its buy recommendation and 300p price target. The stock was down 3.6% at 258.2p.