Analysts have been quick to note that JD Sports Fashion PLC (LSE:JD.)’s interim results were solid, in spite of its warning of a hit to profitability from the stronger pound.
Both Peel Hunt and Shore Capital analysts reiterated ‘buy’ ratings for the FTSE 100-listed retailer following Wednesday’s results.
These showed a 5.2% increase in revenue to just over £5 billion, alongside a 3.4% uptick in pre-tax profit to £405.6 million.
Noting these exceeded expectations, Peel Hunt said “we view this performance as impressive, given the challenging conditions”.
JD had said it faced a £6 million hit to profits in the first half due to foreign exchange headwinds, with this set to stretch to £20 million over the year.
Guidance was held for pre-tax profit to sit between £955 million and £1.035 billion over the full year, though.
Peel Hunt said focus should remain on JD’s day-to-day trading, highlighting “resilience in tough promotional markets” and on-track plans to open 200 new UK stores this year.
Shore Capital added JD had “tested the resolve of investors in the past year”, including through a warning in January, but said Wednesday’s update built on confidence of improvement since.
“Sequential earnings progression on a [roughly] £1 billion-plus pre-tax profit base could still mean significant rating expansion and so share price upside,” analysts said.
Adding the shares were seen as “cheap”, Peel Hunt set a price target of 250p, marking a prospective rise of 67% on Tuesday’s close.
Shares fell 4.6% to 142p on Wednesday.